DECA+ Business Management and Administration Practice Exam

What is characterized as a continuous budget?

1. Annual Budget

2. Static Budget

3. Zero-Based Budget

4. Rolling Budget

The correct answer is: Rolling Budget

A rolling budget is characterized as a continuous budget because it is regularly updated to reflect changes and extends beyond the current period, often by adding a new period as one expires. This approach allows an organization to maintain a forward-looking view by consistently reassessing its financial projections based on the most recent data and operational realities. For example, if a company has a 12-month rolling budget, at the end of each month, the budget is updated to include the next month, ensuring that it always looks one year ahead. This provides flexibility and responsiveness to changing conditions, making it easier for businesses to adapt to new information and alter their strategies accordingly. In contrast, other types of budgets, such as annual or static budgets, do not have this ongoing revision component. Annual budgets are set for a specific year and are less adaptable, while static budgets do not change regardless of actual performance or changes in circumstances. A zero-based budget requires every expense to be justified for each new period but does not have the continuous nature of a rolling budget.