Question

Which budgeting approach is often used when the relationship between inputs and outputs are weak or nonexistent

Answer 1

Answer:

Incremental approach.

Explanation:

A budget is a financial plan used for the estimation of revenue and expenditures of an individual, organization or government for a specified period of time, often one year. Budgets are usually compiled, analyzed and re-evaluated on a periodic basis.

Basically, the first step of the budgeting process is to prepare a list of each type of income and expense that will be integrated or infused into the budget.

This ultimately implies that, before preparing a budget, it is of utmost importance to know total income (inflows) and expenses (outflows).

The final step to be made by the management of an organization in the financial decision-making process is to make necessary adjustments to the budget.

In Business management, an incremental approach is a budgeting approach which is often used when the relationship between inputs and outputs for a particular project are weak or nonexistent. Thus, the incremental approach involves selecting the actual performance or current (previous) year's budget as a base while adding incremental amount of money for the new budget period.

This ultimately implies that, the actual performance or current (previous) year's budget are only taken as a starting point.