Flexible Budgets Imply

question 13

Multiple Choice

Flexible budgets imply

• A)that sales managers can have a wide latitude in modifying prices during the year.
• B)that a firm will have different levels of activity and costs during a year.
• C)the budget process may not be accurate at the beginning of the budget year.
• D)each manager is free to change the budget as the year progresses.

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Definitions:

Other Comprehensive Income

Components of comprehensive income not included in net income, reflecting gains and losses that have not been realized through the income statement.

Journal Entries

The method by which financial transactions are recorded in an accounting system, involving a debit to one or more accounts and a credit to one or more accounts.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, but not control those policies; often evidenced by ownership of 20% to 50% of the voting shares of the investee.

Fair Value

The revenue generated from selling an asset or the charge for relocating a liability in a formal trade between market counterparts at the appraisal time.