[Solved] The salient features of Zero Base Budgeting are: A. It is a (2024)

FAQs

What are the salient features of zero base budgeting? ›

ZBB encourages resource allocation that is proactive and forward-thinking. Zero Based Budgeting promotes cost-consciousness, transparency, and resource management, whereas traditional budgeting can result in inefficiencies and economic stagnation.

Zero-based budgeting is a way to plan how you use each dollar you earn. This budgeting style may give you greater insight into your finances and provides you the flexibility to customize your budget each month. Zero-based budgets require advance planning, particularly for those with inconsistent incomes.

Zero-Based Budget. Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. Zero-based budgeting starts from a "zero base," and every function within an organization is analyzed for its needs and costs.

The zero-based budgeting process is a strategic budgeting approach that mandates a fresh evaluation of all expenses during each budgeting cycle. Unlike traditional budgeting, where previous spending levels are typically adjusted, ZBB requires individuals or organizations to justify every expense from the ground up.

Zero Based Budgeting is a method of budgeting in which all the expenses must be justified for each new period. Zero based budgeting starts from zero base and each function has to analyse the cost from zero.

Zero-based budgeting ensures that managers think about how every dollar is spent and they must do so every budgeting period. This process also forces them to justify all operating expenses and to consider which areas of the company are generating revenue.

The foremost theoretical advantage of ZBB is that it offers a rational and comprehensive means to cut the budget. ZBB can be used to make different cuts to different services based on the perceived value to the organization (rational) and all spending is put under scrutiny (comprehensive).

Zero-based Budgeting is the new form of cost-budgeting system that cuts unnecessary costs in the business and formulates new ways of cash flow in the business. In this technique, each time a new budget is created, the activities are re-evaluated and start from scratch.

Which of the following is a characteristic of zero-based budgeting? ›

Answer and Explanation: The correct answer is D. It results in a fresh consideration of the validity of budget amounts. Each period, the organizational area must justify its spending for the year.

Zero-based budgeting (ZBB) is a budgeting technique in which all expenses must be justified for a new period or year starting from zero, versus starting with the previous budget and adjusting it as needed.