Which budgeting method balances income and expenses on a monthly basis and carries forward adjusted amounts to the next year?

Which budgeting method balances income and expenses on a monthly basis and carries forward adjusted amounts to the next year?

• A. Per diem budget
• B. Continuous budget
• C. Incremental budget
• D. Zero-Based Budget

Answer: (B)

Balancing income and expenses month by month with adjusted amounts carried forward into the next year describes a rolling or continuous budgeting approach. In this method, the budget always has a forward-looking horizon (often spanning 12 months) and is updated regularly as actual results come in. Each month’s variances, new information, and revised forecasts are incorporated, and the updated figures are carried into future periods, effectively pushing the plan forward into the next year. This keeps the budget current and aligned with real conditions, which is especially useful when costs and revenues can change over time. The other approaches work differently. A per diem budget assigns fixed daily allowances for expenses, which doesn’t emphasize a rolling forecast or carrying forward adjustments. An incremental budget builds the new year from the prior year with small changes, but it isn’t refreshed monthly nor automatically carried forward as actuals update. A zero-based budget starts from zero each period, requiring justification for every item, and likewise doesn’t inherently maintain a rolling, forward-looking plan with carried-forward adjustments.

Balancing income and expenses month by month with adjusted amounts carried forward into the next year describes a rolling or continuous budgeting approach. In this method, the budget always has a forward-looking horizon (often spanning 12 months) and is updated regularly as actual results come in. Each month’s variances, new information, and revised forecasts are incorporated, and the updated figures are carried into future periods, effectively pushing the plan forward into the next year. This keeps the budget current and aligned with real conditions, which is especially useful when costs and revenues can change over time.

The other approaches work differently. A per diem budget assigns fixed daily allowances for expenses, which doesn’t emphasize a rolling forecast or carrying forward adjustments. An incremental budget builds the new year from the prior year with small changes, but it isn’t refreshed monthly nor automatically carried forward as actuals update. A zero-based budget starts from zero each period, requiring justification for every item, and likewise doesn’t inherently maintain a rolling, forward-looking plan with carried-forward adjustments.