Asked by Tiffany Riggs-Kredit on May 27, 2024
Verified
Zero-based budgeting refers to
A) a budgeting system that has very uncertain assumptions.
B) a new budgeting system for a company that has not had a budget before.
C) a budgeting system where all activity costs are based on estimates only.
D) a budgeting system where all activities are initially set to zero and will not be continued unless they are clearly justified.
Zero-based Budgeting
A budgeting method where all expenses must be justified for each new period, starting from a "zero base," without assuming that past budget allocations remain valid.
Budgeting System
A systematic approach to creating a financial plan that forecasts income and expenditures over a certain period.
- Understand the concept and purpose of zero-based budgeting.
Verified Answer
GD
Gautam DugarMay 30, 2024
Final Answer :
D
Explanation :
Zero-based budgeting is a budgeting system where all activities are initially set to zero and will not be continued unless they are clearly justified. This means that each department or function must justify every expense they expect to incur, rather than simply assuming that the expenses from the previous year will be sufficient. This system is meant to encourage efficiency and cost-saving measures.
Learning Objectives
- Understand the concept and purpose of zero-based budgeting.
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