A 'Flexible Budget' is most useful because it: MCQ with Answer and Explanation

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A 'Flexible Budget' is most useful because it:

A. Can be changed by managers without approval

B. Assumes all costs are fixed

C. Shows expected costs at various levels of actual production

D. Only targets cash flows

Answer: Option C

Solution (By JKExamLibrary)

Unlike a static budget, a flexible budget adjusts based on the actual activity level, providing a realistic benchmark for variance analysis.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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An audit that is conducted between two annual audits is called:

A. Interim audit

B. Continuous audit

C. Statutory audit

D. Final audit

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Correct Answer: Option A

Explanation:
Interim audit is performed in between the year, often for dividend declaration or half-yearly results.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2 Report Error

When goods are distributed as free samples, the adjustment entry requires:

A. Debiting Free Samples A/c, Crediting Cash A/c

B. Debiting Purchases A/c, Crediting Advertisement A/c

C. Debiting Advertisement A/c, Crediting Trading A/c (or Purchases A/c)

D. Debiting P&L A/c, Crediting Sales A/c

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Correct Answer: Option C

Explanation:
Free samples are an advertising expense (debit), and they reduce the stock of purchased goods at cost price (credit Purchases/Trading).

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3 Report Error

The maximum number of partners in a banking partnership is:

A. 20

B. 50

C. 10

D. No limit

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Correct Answer: Option C

Explanation:
As per Banking Regulation Act, the maximum number of partners for a banking firm is 10.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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