What type of budget is expected to continuously evolve and adjust throughout the fiscal period?

A rolling budget is designed to be continuously updated and adjusted throughout the fiscal period. This type of budget extends beyond the traditional one-year time frame, typically adding new months or quarters as each period concludes. As a rolling budget is revisited regularly, it allows for more flexibility and responsiveness to changing circumstances, such as shifting economic conditions, unexpected expenditures, or new revenue projections.

This approach enables organizations to maintain a current and relevant budget that reflects the ongoing needs and financial performance of the entity. Consequently, decision-makers can make informed choices based on the latest data, enhancing financial planning and management throughout the fiscal year.

In contrast, performance, incremental, and zero-based budgets do not share this ongoing adaptability. Performance budgets focus on the outputs and outcomes of spending; incremental budgets build upon previous budgets without substantial changes; and zero-based budgets require each budget cycle to start from a "zero base," justifying all expenses anew. These methods are more static in nature and do not adjust to new information as dynamically as a rolling budget does.