Types of Budgeting Methods
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There are several types of budgeting methods which range from incremental, long term,
short term, zero-based and even fixed and rolling budgets which can also be known as
continuous budgets. The three types of budgets I am going to focus on are incremental, zero-
based, and continuous.
An incremental budget is basically where a company makes only a small incremental
change from the previous year to the current year. When using this type of budget method a
company pretty much assumes that the budget will remain about the same or consistent with the
previous year and the company can operate at a minimum. The company estimates its current
year spending based on the previous year’s spending and is used mostly in companies where
managers are not putting a lot of thought or time into determining the budgets.
