Budgeting Lexicon

Question 1

What is a budget?

Answer 1

Quantified financial plan for a defined period (usually ≤ 1 year)

Question 2

What is a master budget?

Answer 2

Consolidated set of inter‑locking operating & financial budgets (Budgeted IS, BS, CF)

Question 3

What is a capital budget?

Answer 3

Planned outlays for long‑term investment projects

Question 4

What is an operating budget?

Answer 4

Revenues & expenses expected in the forthcoming period

Question 5

What is incremental budgeting?

Answer 5

Next year = current actuals ± adjustments; quick but may embed slack

Question 6

What is zero-based budgeting (ZBB)?

Answer 6

Every cost must be justified from a zero base each cycle

Question 7

What is a rolling budget?

Answer 7

Continuous 12‑month (or quarter) budget updated each period

Question 8

What is the difference between top‑down and bottom‑up budgeting?

Answer 8

Imposed by senior management vs participative approach by lower levels