ExpertEasy2 marksMultiple Choice
ACCA · Question 20 · Budgeting
Section A
An AI software developer operates in a highly dynamic market where technology changes rapidly. They use a budgeting system where, as one month ends, another month is added to the end of the budget period.
What is this type of budget called?
Section A
An AI software developer operates in a highly dynamic market where technology changes rapidly. They use a budgeting system where, as one month ends, another month is added to the end of the budget period.
What is this type of budget called?
Answer options:
A.
A flexible budget
B.
A rolling budget
C.
A zero-based budget
D.
A fixed budget
How to approach this question
Look for the keyword indicating continuous extension of the time horizon (e.g., adding a month as one drops off).
Full Answer
B.A rolling budget✓ Correct
A rolling budget (or continuous budget) is a budget kept continuously up to date by adding another accounting period (e.g., a month or quarter) when the earliest accounting period has expired. This is highly suitable for dynamic, fast-changing industries as it forces management to constantly look ahead.
Common mistakes
Confusing rolling budgets with flexible budgets.
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