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Hi john sir..how r u john sir..hope u r fine..after a long time due to some issue.again i m again on opentuition forum..hope u remember..plz guide me with the following.
Q.1..Incremental budgeting adjust previous year results for inflation and prepare new budget..my question is that the new budget using incremental approach would b the fixed budget or flexed?
Q.2..can we say that rolling budget is an amended approach of incremental budgeting?
Q.3..Rolling budget is prepared to remain updated and certain..but i could not exactly understand how?..we only add a a budget of a period like for a quarter or month how ths can help us?..moreover budgets are prepared and then compard to actual results..how can we do ths?
Hi again 🙂
I will answer your question, but in future please ask in the Ask the Tutor Forum if you want an answer from me. This forum is for students to help each other.Q1: Incremental budgeting is where you are preparing an original fixed budget for the new year by taking last years actual figures and adjust both for changes in prices and for changes in the expected level of activity (i.e. expected sales and production). It becomes the fixed budget for the coming year.
Q2: Not really. Although an incremental approach will probably be used, it does not have to be. The main thing with a rolling budget it that a new budget is being prepared throughout the year rather than just once a year.
Q3: Budgets are not prepared just to compare to actual results – that is one use that is made of them but certainly not the only use of them. For example, they help with decision making – suppose we prepare the budget and it seems we are going to make a loss. Then maybe we would consider increasing our prices in order to try and make sure we make a profit. Do watch the free lecture on budgets where I go through the different uses that might be made of budgets.
Thanks alot john sir..actually by mistake i wrote here my question..thanks for your kind reply
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