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CMA Intermediate · Cost Accounting · Budget and Budgetary Control

A budget that is prepared for a long period, usually more than one year, and covers matters such as capital expenditure and long-term finance is called a:

This is a long-term budget. Classification by period distinguishes long-term budgets, covering more than a year for items like capital expenditure and long-term finance, from short-term budgets of a year or less. Flexible describes behaviour with activity level, not the time period covered.

  1. AShort-term budget
  2. BCurrent budget
  3. CLong-term budgetCorrect
  4. DFlexible budget

Explanation

Budgets are classified by time as long-term, short-term and current budgets. A budget covering more than a year, such as for capital expenditure and long-term finance, is a long-term budget. Short-term budgets cover about a year or less, and flexible refers to activity, not time.

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