Correct Answer:
C. Is adjusted to the actual level of activity achieved
Flexible budgets allow fair comparison of actual costs with costs allowed at the actual activity level.
November 13, 2026 · Accounting and Finance MCQs, Cost & Management Accounting MCQs
A flexible budget is a budget that:
Related MCQs
An audit engagement letter is mainly used to:
A.
Record the agreed terms of the audit engagement between auditor and client
B.
Report the audit findings to the public
C.
Confirm receivable balances
D.
Appoint the internal auditor
Correct answer is:
A. Record the agreed terms of the audit engagement between auditor and client
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EBIT is Rs. 200,000 and interest is Rs. 50,000. The degree of financial leverage is approximately:
A.
4.0
B.
0.75
C.
1.33
D.
1.25
Correct answer is:
C. 1.33
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Which type of audit evidence is generally the most reliable?
A.
Photocopies of documents provided by management
B.
Original documents obtained directly from an independent external party
C.
Oral explanations given by management
D.
Documents prepared by the entity's own staff
Correct answer is:
B. Original documents obtained directly from an independent external party
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An example of a direct tax is:
A.
Sales tax
B.
Customs duty
C.
Excise duty
D.
Income tax
Correct answer is:
D. Income tax
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A management representation letter:
A.
Is written confirmation from management that supports other audit evidence but cannot replace it
B.
Is enough evidence on its own for any assertion
C.
Is issued by the auditor to the shareholders
D.
Is needed only for sole proprietorships
Correct answer is:
A. Is written confirmation from management that supports other audit evidence but cannot replace it
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Overhead is under-absorbed when:
A.
Actual overhead is less than absorbed overhead
B.
Actual overhead equals absorbed overhead
C.
Actual overhead is greater than absorbed overhead
D.
Budgeted overhead is zero
Correct answer is:
C. Actual overhead is greater than absorbed overhead
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