ExpertEasy2 marksMultiple Choice
ACCA · Question 11 · Budgeting and control
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?
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?
Answer options:
A.
It requires less administrative time and effort to maintain.
B.
It ensures that management is always looking ahead a full 12 months, encouraging continuous planning.
C.
It guarantees that the NGO will not experience any budget variances.
D.
It forces managers to justify every single cost from scratch each quarter.
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).
Practice the full ACCA PM — Performance Management Practice Exam 4
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