Which of the Following Statements Relating to a Master Budget

question 41

Multiple Choice

Which of the following statements relating to a master budget is incorrect?

• A) It is a set of interrelated budgets.
• B) It is normally overseen by a budget committee.
• C) Budget targets are fixed and not subject to revision.
• D) It is typically prepared for a one-year period that coincides with the entity's financial year.

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Definitions:

Turnover

The rate at which inventory is sold or replaced over a specific period, or in human resources, the rate employees leave and are replaced in a company.

Residual Income

The income that exceeds the minimum required return on investment, often used as a performance measure in managerial accounting.

Required Rate Of Return

The minimum annual percentage return an investor expects to achieve from an investment, considering the risk involved.

Net Operating Income

A financial metric indicating the income generated from a company's core business operations, excluding deductions of taxes and interest.