Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

Financial Accounting

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

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Multiple Choice

A flexible budget may be prepared:

for any level of activity within the relevant range

only for fixed costs

only at the beginning of the accounting period

only for the actual level of activity achieved

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Verified step by step guidance

Understand the concept of a flexible budget: A flexible budget is a financial plan that adjusts or flexes with changes in the level of activity or volume. It is designed to provide a more accurate comparison of budgeted and actual costs at different activity levels.

Identify the relevant range: The relevant range refers to the range of activity levels within which the assumptions about fixed and variable costs are valid. A flexible budget is applicable within this range.

Analyze the options provided: Evaluate each option to determine its validity. For example, 'only for fixed costs' is incorrect because a flexible budget accounts for both fixed and variable costs. Similarly, 'only at the beginning of the accounting period' is incorrect because a flexible budget can be prepared at any time.

Focus on the correct option: A flexible budget is prepared for any level of activity within the relevant range, as it adjusts to reflect changes in activity levels while maintaining the assumptions about cost behavior.

Conclude the reasoning: The correct answer is 'for any level of activity within the relevant range,' as this aligns with the purpose and functionality of a flexible budget in financial accounting.