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discuss circumstances under which Rolling budget and zero based budgets might be used.

discuss circumstances under which Rolling budget and zero based budgets might be used.

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Zero based budgeting is a method in which all expenses must be separately recorded for each period. It is used when organisations build their annual budget from zero every year to confirm that all component of annual budget are relevant, cost effective and results in improved savings. Zero based budgeting helps entities to reduce costs, solve problems and ensure that every penny spent is contributing to growth objective of the entity.

When an accounting period expires but it is still kept upto date on continuous basis by adding another accounting periods, this process is called making rolling budgets. Rolling budget is used in a fast moving environment accurate forcasts is not possible to be made, rolling budget can also be used in case entity want tight control for an area of the business.

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