13.4 Budget Methodologies

Question 1

_______________ budgeting extends budgets estimates at interim dates so that a budget for a specified period, usually 12 months, is always available.

Answer 1

Continuous budgeting

Question 2

_________ budgeting prepares budgets for varying levels of productivity.

Answer 2

Flexible Budgeting

Question 3

_____________ budgeting bases budgets on the most likely levels of activity.

Answer 3

Probabilistic Budgeting

Question 4

A method of budgeting in which the cost of each program must be justified, starting with the one most vital to the company is

Answer 4

Zero-based budgeting

Question 5

The principal advantage of _______ budgeting is that managers are forced to review each program in its entirely ate the beginning of every budget period, rather than merely extrapolate historical figures.

Answer 5

Zero-based budgeting

Question 6

A company’s board of directors has requested a full in-depth review of all budgeted items for next fiscal year’s operating budget. The controller of the company subsequently advised all business units heads that the company will not automatically approve operating budget items for next fiscal year simply because they were approved in the past, and that all operating budget items for the next year will need to be justified. Based on the above information, which one of the following budgeting systems is the company most likely using?

A. Activity-based budgeting
B. Zero-based budgeting
C. Project budgeting
D. Flexible budgeting

Answer 6

B. Zero-based budgeting

Question 7

A budgeting approach that requires a manager to justify the entire budget for each period is known as

Answer 7

zero-based budgeting

Question 8

______ budget is a budget that lists budget items by program rather than by type of expense; it could be either zero-based or incremental

Answer 8

Program budgeting

Question 9

_______ budgeting is the traditional budgeting method in which the current year’s budget is simply adjusted to allow for changes planned for the coming year.

Answer 9

incremental budgeting

Question 10

_______ budgeting refers to the way a budget is used, and not how it is developed.

Answer 10

Performance budgeting

Question 11

The type of budget that is continually updated to add a new budget period as the most recent budget period is completed is called

Answer 11

Rolling budget

Question 12

_______ budget adjusts for changes in the volume of activity

Answer 12

Flexible budget