Budgeting and control — ACCA Practice Question 11

How to approach this question

Identify the definition of a rolling budget (adding a new period as the current one expires) and its logical benefit.

Full Answer

B.It ensures that management is always looking ahead a full 12 months, encouraging continuous planning.✓ Correct

A rolling budget is continuously updated by adding a further accounting period (e.g., a quarter) when the earliest accounting period has expired. Its primary advantage is that it keeps managers focused on the future, ensuring there is always a full 12-month planning horizon.

Common mistakes

Assuming rolling budgets save time (Option A) or confusing them with Zero-Based Budgeting (Option D).

Section A

EduCare, an educational NGO, uses a rolling budget system. They update their budget at the end of each quarter.

What is the primary advantage of EduCare using a rolling budget compared to a traditional periodic annual budget?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA PM — Performance Management Practice Exam 4

More questions from this exam

Section A EduCare, an educational NGO, uses a rolling budget system. They update their budget at the end of each quarter. What is the primary advantage of EduCare using a rolling budget compared to a traditional periodic annual budget?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA PM — Performance Management Practice Exam 4

More questions from this exam

Section A

EduCare, an educational NGO, uses a rolling budget system. They update their budget at the end of each quarter.

What is the primary advantage of EduCare using a rolling budget compared to a traditional periodic annual budget?