A Flexible Budget

question 111

Multiple Choice

A flexible budget

• A)is not as useful in evaluating a manager's performance as a static budget.
• B)can be prepared for each of the types of budgets included in the master budget.
• C)relies on the assumption that unit fixed costs will remain constant within the relevant range of activity.
• D)reflects budget data for one level of activity only.

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Definitions:

Residual Value

The estimated value of a fixed asset at the end of its useful life, reflecting what it could be sold for or its disposal cost.

Depreciation

An accounting method of allocation that spreads the cost of an asset over its useful life to account for its decrease in value over time.

Book Value

The net value of a company's assets minus its liabilities, often used to assess a company's worth.

Impaired Goodwill

The decrease in the value of a company's goodwill, often due to adverse changes in the business or market conditions, requiring a write-down in accounting.