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1. Which of the following is a type of budget that shows the expected results of
various levels of activity?
a) Flexible budget
b) Static budget
c) Zero-based budget
d) Incremental budget
Answer: A. A flexible budget is a type of budget that shows the expected results of
various levels of activity. It can be adjusted to reflect changes in the volume or mix
of output.
2. Which of the following is a type of budget that is based on a single level of activity
and does not change even if the level of activity changes?
a) Flexible budget
b) Static budget
c) Zero-based budget
d) Incremental budget
Answer: B. A static budget is a type of budget that is based on a single level of
activity and does not change even if the level of activity changes. It is useful
for planning and control purposes, but it does not reflect the performance.
3. Which of the following is a type of budget that requires each manager to justify
every item of expenditure from scratch, as if the activity or project were being done
for the first time?
a) Flexible budget
b) Static budget
c) Zero-based budget
d) Incremental budget
Answer: C. A zero-based budget is a type of budget that requires each manager to
justify every item of expenditure from scratch, as if the activity or project wereÂÂ
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