Flexible Budgets Essay Example | Topics and Well Written Essays - 250 words

Flexible Budgets - Essay Example This paper will outline the difference between the two methods of budgeting. Flexible budget records and outlines different information than static budget since it records the daily activities of budgeting and accommodates the accountings entries and activities that are new to the budget system. Unlike static budget which is prepared before the beginning of accounting period, flexible budget is prepared daily and continues till the end of the period (Mowen, 2012). Static budget ensures comparison and variance analysis is done due to presence of actual budget and estimated budget while the flexible budget does not involve comparison of budgets as there is only one budget. A flexible budget is not always better as it does not involve many activities like variance analysis to evaluate the performance of the company. Static budget is usually preferred where a business estimates the budget and wants to compare the difference between the estimated budget and actual budget (Mowen,