Which budgeting method involves preparing budgets based on previous periods' per

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Question: Which budgeting method involves preparing budgets based on previous periods\' performance?

Options:

Correct Answer: Incremental budgeting

Solution:

Incremental budgeting uses previous periods\' budgets as a base and adjusts for expected changes.

Which budgeting method involves preparing budgets based on previous periods' performance?

Which budgeting method involves preparing budgets based on previous periods' performance?

Step 1: Understand what budgeting means. Budgeting is planning how to spend money.
Step 2: Learn about different budgeting methods. There are various ways to create a budget.
Step 3: Identify the method that uses past budgets. This method looks at how much was spent in the past.
Step 4: Know the name of this method. The method that uses previous budgets as a starting point is called incremental budgeting.
Step 5: Understand how it works. Incremental budgeting takes last year's budget and makes small changes for the new budget.

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