Which statement about rolling budgets is true?

Which statement about rolling budgets is true?

• A. Budgets would be prepared every 1, 2, or 3 months
• B. Budgets are prepared once per year
• C. Budgets are updated and extended by adding new periods
• D. Budgets ignore actual performance

Answer: (C)

Rolling budgets keep planning alive by continually extending the horizon. Instead of fixing the budget for a set period and leaving it unchanged, you regularly update the numbers and add a new future period at the end, so the overall forecast window stays the same length. This lets you incorporate actual performance and new information as it becomes available, keeping plans realistic and responsive. That’s why the statement about updating and extending by adding new periods is the true description. Preparing once per year describes a static budget, not a rolling one. Rolling budgets don’t ignore actual performance; they use actual results to revise forecasts, and the timing of updates (monthly or quarterly) is a practical detail rather than the defining feature.

Rolling budgets keep planning alive by continually extending the horizon. Instead of fixing the budget for a set period and leaving it unchanged, you regularly update the numbers and add a new future period at the end, so the overall forecast window stays the same length. This lets you incorporate actual performance and new information as it becomes available, keeping plans realistic and responsive.

That’s why the statement about updating and extending by adding new periods is the true description. Preparing once per year describes a static budget, not a rolling one. Rolling budgets don’t ignore actual performance; they use actual results to revise forecasts, and the timing of updates (monthly or quarterly) is a practical detail rather than the defining feature.