Which of the Following Reason(s)cause Flexible Budgets to Be Useful

question 7

Multiple Choice

Which of the following reason(s) cause flexible budgets to be useful planning tools?

• A) Flexible budgets allow managers to anticipate results under a variety of scenarios.
• B) Flexible budgets can help determine if a company's cash position is adequate.
• C) Flexible budgets can help managers judge if materials and storage facilities are appropriate for various production levels.
• D) All of these answers are correct.

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Definitions:

Bonds

These are fixed-income investment products where an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate.

Debt Instruments

Financial assets that represent a debtor's obligation to repay borrowed money or other forms of credit to the creditor according to stated terms.

Original Issue Discount

The difference between the par (face) value of a bond and the lower price at which it was originally sold, which must be reported as interest income over the life of the bond.

Tax-exempt Debt

Debt securities issued by state or municipal governments whose interest payments are exempt from federal income tax, and sometimes state and local taxes.