Juwan is updating the budget for Pittman's Cycle Shop. His manager has told him that a new piece of equipment has been purchased with a monthly loan payment of $123.50 for the next six months. Juwan completes the new budget by reviewing the budgeted amounts in different categories so that both budgeted revenue and budgeted expenses balance. Which of the following can be said about Pittman's Cycle Shop?
A) Juwan must update the actual ending balances from the previous period before he can complete the budget.
B) Pittman's Cycle Shop is using a rolling budget.
C) Pittman's Cycle Shop is using a zero-based budget.
D) Since Juwan is adding the monthly loan payment to the budget, the budget is considered a participative budget.

Question

Quizplus · Accepted Answer

To create a zero-based budget, the revenues and expenses must be reviewed to ensure that revenues minus expenses equal zero.

Juwan Is Updating the Budget for Pittman's Cycle Shop