The budget method that maintains a constant twelve-month planning horizon by adding a new month on the end as the current month is completed is called:
A)an operating budget.
B)a capital budget.
C)a continuous budget.
D)a master budget.

Question

Quizplus · Accepted Answer

This is because the given method is a continuous budget, which is a type of budgeting approach that extends over a constant planning horizon. The approach involves adding one extra month to the end of the budget after each month of the current period is completed, so that there is always a fresh twelve-month planning horizon. Option A is incorrect because an operating budget refers to a financial plan that covers a single fiscal period, typically a year, and focuses on the routine operating expenses and revenues of a business. Option B is incorrect because a capital budget refers to a financial plan for the acquisition of long-term assets, such as property, plant, and equipment, over a multi-year period. Option D is incorrect because a master budget refers to a comprehensive financial plan that covers all the individual budgets and performance objectives of a business, including the operating budget, capital budget, and other functional budgets.

The Budget Method That Maintains a Constant Twelve-Month Planning Horizon