Which statement best describes a flexible budget versus the master budget?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $25.99Unlock all

Prepare for the Accounting SmartBook Test. Practice with tailored questions and helpful hints. Analyze comprehensive explanations for a deep understanding. Ace your exam with confidence!

Multiple Choice

Which statement best describes a flexible budget versus the master budget?

Explanation:
A flexible budget shows costs and revenues at different activity levels so it can be compared to actual results, even when actual output differs from the plan. It is prepared for several levels of activity, allowing the budget to be adjusted to what actually happened. The master budget, by contrast, is a static plan for a single expected level of activity. Therefore, the statement that best describes a flexible budget is that it is prepared at several levels of activity. The other choices describe the master budget or misunderstand its nature: a single, unchanging plan, or ignoring actual activity, which do not apply to a flexible budget.

A flexible budget shows costs and revenues at different activity levels so it can be compared to actual results, even when actual output differs from the plan. It is prepared for several levels of activity, allowing the budget to be adjusted to what actually happened. The master budget, by contrast, is a static plan for a single expected level of activity. Therefore, the statement that best describes a flexible budget is that it is prepared at several levels of activity. The other choices describe the master budget or misunderstand its nature: a single, unchanging plan, or ignoring actual activity, which do not apply to a flexible budget.

More Multiple Choice Questions
Subscribe

Get the latest from Passetra

You can unsubscribe at any time. Read our privacy policy