What is a rolling budget and its advantage?

What is a rolling budget and its advantage?

• A. It is fixed for the year; advantage is stability.
• B. It is updated only quarterly; advantage reduces admin.
• C. It extends for a further period as time passes; advantage stays current and relevant.
• D. It ignores variability; advantage simplicity.

Answer: (C)

A rolling budget is a continuously updated forecast that extends the budget horizon as time passes. Instead of sticking to a fixed annual plan, you add a new period (for example, a month or quarter) to the end of the budget each period, so you always have a set number of future periods planned. The key advantage is that it stays current and relevant. By updating with the latest actuals and assumptions, you can adjust targets, resources, and actions to reflect what’s really happening in the business, improving planning, control, and responsiveness to change.

A rolling budget is a continuously updated forecast that extends the budget horizon as time passes. Instead of sticking to a fixed annual plan, you add a new period (for example, a month or quarter) to the end of the budget each period, so you always have a set number of future periods planned.

The key advantage is that it stays current and relevant. By updating with the latest actuals and assumptions, you can adjust targets, resources, and actions to reflect what’s really happening in the business, improving planning, control, and responsiveness to change.