ACCA PM · Chapter 10 · Question 4 of 9
A company prepares a 12-month budget. At the end of each month, it adds a budget for the same month of the following year and revises the remaining months. Which type of budget is this, and when is it most useful?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) A rolling budget, most useful when the business environment is uncertain or changing quickly
Explanation
A rolling (continuous) budget always covers a full period ahead by adding a new period as one expires, so plans reflect current conditions. This is particularly valuable where conditions change rapidly and an annual budget would soon become out of date. Its drawback is the time and cost of frequent revision.
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