Question

Incremental budgeting allocates increased or decreased funds to a department by using the last budget period as a reference point; only incremental changes in the budget request are reviewed. True or false?

Answer 1

True

Step-by-step explanation:

The incremental budget technique is an important management accounting technique, which is prepared by making minimal changes in the previous budget. The budget is designed by allocating funds by using the preceding budget as a reference point. Incremental budget encourages spending up to the budget. It also helps to make sure that a reasonable budget is allocated for the next period.