A budget format that is continuously updated to cover a set future timeframe is termed __________?
Show answer Hide answer
Answer: D. continuous budget
Explanation
A continuous budget constantly updates by adding a new period as the current one expires. This ensures organizations always maintain a rolling twelve-month forecast for better planning. Management uses this method to adapt quickly to changing business conditions. Continuous budgeting eliminates the static nature of traditional annual budgets. It requires finance teams to regularly review and extend forecasts. This practice keeps organizational targets aligned with current market realities.
Companies operating in volatile industries often rely on continuous budgets. Retailers and tech firms use them to manage shifting inventory and revenue streams. This approach prevents managers from relying on outdated financial projections. Period budgets cover fixed historical intervals rather than rolling future dates. Batch budgets imply group processing rather than an evolving financial forecast. Discontinued budgets refer to abandoned plans rather than active, updated systems.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
Related questions
Q1. The charge of depreciation directly reduces the ____________?
Show answer Hide answer
Answer: D. Capital
Depreciation expense reduces net income, which ultimately decreases owner's equity or capital. At period-end, expense accounts are closed into retained earnings or capital accounts. Consequently, recording depreciation l...
Q2. A Depreciation Account listed directly within the Trial Balance is reported in:
Show answer Hide answer
Answer: A. Profit and Loss A/c
Depreciation listed in the trial balance is an operating expense reported in the Profit and Loss Account. Since it already appears in the trial balance, its adjusting entry has been completed. It requires no further bala...
Q3. Another name for the depreciation fund method is __________?
Show answer Hide answer
Answer: A. Sinking Fund Method
The depreciation fund method is also known as the sinking fund method. This technique involves setting aside a specific cash fund alongside annual depreciation charges to replace the asset. Interest earned on fund invest...
Q4. Which of the following errors affects only a single account?
Show answer Hide answer
Answer: D. All the three
Errors of casting, carry forward, and posting all impact only a single ledger account. A casting mistake occurs when adding up a column of figures incorrectly. Carry forward errors happen when transferring totals imprope...
Q5. The cost of goods sold does not include ___________?
Show answer Hide answer
Answer: D. Postage & Stamps
Postage and stamps are administrative or office expenses and are excluded from the cost of goods sold. They represent overhead costs rather than direct production or inventory acquisition costs. Therefore, they appear in...
Q6. All of the following types of expenditures are classified as revenue expenses except __________?
Show answer Hide answer
Answer: B. Putting the new asset in working condition
Expenditures incurred to put a newly acquired asset into working condition are capitalized rather than treated as routine revenue expenses. Capital expenditures add long-term value to fixed assets. They appear on the bal...