What is budget?
9 important questions on What is budget?
Disadvantages of line item budgets?
- Inflexible in responding to unanticipated needs
- Little incentive for cost savings
What is budget lapsing?
What are the advantages of budget lapsing?
- tighter control than budgets that do not lapse
- prevents risk averse managers from accumulating funds
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What are the disadvantages of budget lapsing?
What are static budgets?
What are flexible budgets?
What is incremental budgeting?
review focuses on incremental chages and may ignore inefficiencies in core budget.
What is zero based budgeting (ZBB)?
What is the advantage of zero based budgeting?
- It motivates managers to eliminate inefficient expenses.
- Useful when firm is changing strategic direction or when uncertainty is high.
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