What Is the Primary Difference Between a Static Budget and a Flexible

question 30

Multiple Choice

What is the primary difference between a static budget and a flexible budget?

• A)The static budget contains only fixed costs, while the flexible budget contains only variable costs.
• B)The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels.
• C)The flexible budget is prepared for a single level of activity, while a static budget is adjusted for different activity levels.
• D)The static budget is constructed using input from only upper level management, while a flexible budget obtains input from all levels of management.
• E)The flexible budget is constructed using input from only upper level management, while a static budget obtains input from all levels of management.

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Definitions:

Parent's Cash Flows

The cash inflows and outflows directly associated with the primary operating entity in a group of companies or conglomerate.

AASB 121

Refers to the Australian Accounting Standards Board provision dealing with the effects of changes in foreign exchange rates.

Exchange Differences

Variance arising from translating foreign currency transactions or foreign operations into the reporting currency.

Presentation Currency

The form of money used to express the financial records of a company.