Question 1

The difference between a static budget and a flexible budget is as follows:

a	The flexible budget highlights a single activity, while a static budget allows budgeting over a range of activities.

b	The static budget highlights a single activity level, while the flexible budget shows expected results for several activity levels.

c	The flexible budget measures expected income throughout a relevant range, while the static budget measures various activity levels for only one relevant range.

d	There is no difference between a static budget and a flexible budget except for the names.

Question 2

Continuous budgeting

a	measures the ten-year period from the beginning of the next fiscal year.

b	means that a new 12-month budget must be made after the current 12-month budget expires.

c	is the responsibility of the external auditor for the corporation.

d	None of the above answers is correct.

Question 3

The master budget for a corporation begins with

a	the sales budget.

b	the production budget.

c	the cash budget.

d	the cost of good sold budget.

Question 4

The production budget is done

a	in dollars only.

b	in units only.

c	in both dollars and units.

d	in neither dollars nor units.

Question 5

The cash budget

a	includes expected receipts and payments of cash for a period of time.

b	does not include any planned purchases of fixed assets.

c	is a stand-alone budget -- that is, it is not integrated with any of the other operating budgets.

d	must always show more money coming in than money going out..