Funds flow statement, cash flow statement as per AS 3, budgets and budgetary control, marginal costing and break-even analysis - One Line Questions
1.
The formula for Contribution Margin Ratio is: —
(Sales - Variable Costs) / Sales
2.
If a company's contribution margin ratio is 40% and its fixed costs are $100,000, what is the break-even sales revenue? —
$250,000
3.
A fixed budget is prepared for: —
A single level of activity
4.
In a Funds Flow Statement, an increase in current assets (other than cash) is treated as: —
An application of funds
5.
Marginal costing is also known as: —
Direct costing
6.
The margin of safety is the difference between: —
Actual sales and break-even sales
7.
Which of the following is a common adjustment made to net profit to arrive at cash flow from operating activities under the indirect method? —
Add back depreciation
8.
Under the indirect method of cash flow from operations, a decrease in inventory is: —
Added to net profit
9.
A Funds Flow Statement shows changes in: —
Working capital and its components
10.
The process of comparing actual results with budgeted results and taking corrective action is known as: —
Budgetary control
11.
The difference between the budgeted cost and the actual cost for a given level of activity is known as: —
Budgetary variance
12.
Which of the following is typically NOT included in a cash budget? —
Depreciation expense
13.
The difference between the selling price per unit and the variable cost per unit is called: —
Contribution Margin per unit
14.
If fixed costs increase, the break-even point will: —
Increase
15.
If the selling price per unit decreases while variable cost per unit and total fixed costs remain the same, the break-even point in units will: —
Increase
16.
In break-even analysis, a decrease in selling price per unit (with other factors constant) will: —
Increase the break-even point
17.
A cash budget helps in: —
Planning for future cash needs and excesses
18.
Which of the following is a primary advantage of budgetary control? —
Facilitates planning, coordination, and control
19.
Which of the following is a key difference between Funds Flow Statement and Cash Flow Statement? —
FFS focuses on working capital changes, CFS focuses on cash receipts and payments
20.
Which of the following is considered a 'fund' in the context of a Funds Flow Statement? —
Working capital
21.
Which type of budget is revised during the budget period to take into account changes in activity levels or other relevant factors? —
Flexible Budget
22.
A flexible budget adjusts for changes in: —
Activity level
23.
Which of the following is the formula for the Break-Even Point (in units)? —
Fixed Costs / Contribution Margin per unit
24.
The Break-Even Point (in sales revenue) can be calculated as: —
Total Fixed Costs / Contribution Margin Ratio
25.
A budget that remains constant irrespective of the volume of output is called a: —
Fixed budget
26.
A company's ability to meet its short-term obligations is best assessed by which statement? —
Cash Flow Statement
27.
Which of the following is a common non-fund item that is added back to net profit in the operating activities of a cash flow statement? —
Loss on sale of asset
28.
Which type of budget requires justification for all expenditures, not just incremental amounts? —
Zero-Based Budget
29.
In marginal costing, fixed manufacturing overheads are: —
Expensed in the period incurred
30.
Which of the following is a disadvantage of marginal costing? —
It is not suitable for external reporting under GAAP/IFRS
31.
When preparing a cash flow statement using the indirect method, an increase in accounts receivable indicates: —
Less cash collected than sales revenue
32.
In Zero-Based Budgeting (ZBB), every activity must be justified: —
From scratch, regardless of previous budgets
33.
In marginal costing, which costs are treated as product costs and included in the inventory valuation? —
Only variable costs
34.
Which of the following activities in a Cash Flow Statement typically involves the purchase or sale of long-term assets and investments? —
Investing Activities
35.
Cash flows from interest and dividends received are typically classified as which type of activity in a Cash Flow Statement? —
Investing Activities
36.
Under AS 3, cash flows arising from the acquisition and disposal of property, plant, and equipment are classified as: —
Investing activities
37.
A long-term budget that covers the planned capital expenditures of a company is called a: —
Capital Budget
38.
The Cash Flow Statement, as per AS 3, classifies cash flows into which of the following categories? —
Operating, Investing, and Financing
39.
Which budget is often called the 'cornerstone' of the master budget and forms the basis for many other budgets? —
Sales Budget
40.
Which of the following is a key component of marginal costing, representing the difference between sales revenue and variable costs? —
Contribution Margin
41.
Under the direct method of preparing the Operating Activities section of a Cash Flow Statement, which of the following is directly reported? —
Cash receipts from customers
42.
Which of the following is a financing activity in a cash flow statement? —
Payment of dividends
43.
Which of the following is a source of funds in a Funds Flow Statement? —
Redemption of debentures
44.
A budget that is prepared for a specific period and then replaced by a new budget for the next period is a: —
Fixed Budget
45.
Which of the following is NOT a component of a Master Budget? —
Variance Report
46.
In marginal costing, the profit is directly related to: —
Contribution margin
47.
Which of the following is NOT a primary objective of a Funds Flow Statement? —
To measure the profitability of a company
48.
What is the primary purpose of a performance budget? —
To measure the performance of various departments or functions
49.
What is the primary purpose of a budget? —
To provide a framework for planning and controlling future operations
50.
The term 'contribution margin' represents the amount of revenue available to cover: —
Fixed costs and generate profit