Page 151 - P1 Integrated Workbook STUDENT 2018

Budgeting

1.4 Periodic and rolling budgets

Periodic budget

 Budget prepared for typically one year at a time.

 No alterations once the budget has been set.

 Suitable for stable businesses where forecasting is easy and where tight control
is not necessary.

Rolling budget

 A budget kept continuously up to date by adding another accounting period
(e.g. month or quarter) when the earliest accounting period has expired.

 Useful for keeping tight control.

 Always have an accurate budget for the next 12 months.

 Although time consuming and bureaucratic, rolling budgets can lead to be fewer
planning variances and more useful variance analysis.

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