Which statement best describes rolling budgets?

Which statement best describes rolling budgets?

• A. They are kept up-to-date by adding another accounting period
• B. They are fixed for several years
• C. They ignore new cost data
• D. They replace the annual budget entirely

Answer: (A)

Rolling budgets are continuous planning tools that stay current by extending the budget period as time moves forward. Instead of setting a fixed plan for one year, you keep adding a new period (like a month or quarter) to the end of the budget as each period ends. This keeps the forecast alive for a rolling horizon, such as 12 months ahead, and it incorporates the latest actual data and updated estimates. That’s why this description fits best: the budget is kept up-to-date by adding another accounting period. Rolling budgets are not fixed for several years, they do not ignore new cost data, and they do not replace the annual budget entirely; they continually refresh the plan beyond the current year.

Rolling budgets are continuous planning tools that stay current by extending the budget period as time moves forward. Instead of setting a fixed plan for one year, you keep adding a new period (like a month or quarter) to the end of the budget as each period ends. This keeps the forecast alive for a rolling horizon, such as 12 months ahead, and it incorporates the latest actual data and updated estimates.

That’s why this description fits best: the budget is kept up-to-date by adding another accounting period. Rolling budgets are not fixed for several years, they do not ignore new cost data, and they do not replace the annual budget entirely; they continually refresh the plan beyond the current year.