Types Of Budgets

Question 1

Top down budget

Answer 1

Prepared by upper management and given to organizing units

Question 2

Bottom up budget

Answer 2

Prepared by each organizing unit and sent to upper management

Question 3

Baseline budget

Answer 3

Uses a previous budget and adjusts for current conditions

Question 4

Zero based budget

Answer 4

Determines cost, outlay, and inflows without a baseline budget. Attr,pts to reduce unnecessary expenses. Requires a manager to justify each expense, nothing is automatically approved.

Question 5

Fixed budget

Answer 5

Aka static budget does not change based on business variations.

Question 6

Flexible budget

Answer 6

Changes with business activity because the budget is constructed with a rate per unit of activity.

Question 7

Incremental budget

Answer 7

Starts with an existing budget and adds incremental amounts relative to the current budget.
Most common budgeting method
Best suited if primary costs do not change annually

Question 8

Value proposition budgeting

Answer 8

Budget building mindset
Aims to tighten the budget