Which of the following statements is true about zero-based budgeting
A)Managers are required to justify all budgeted expenditures.
B)Budgets have no financial components - are specified in product units only.
C)The process starts with last year's budget and changes anticipated are added or subtracted to get the current budget.
D)Managers are required to use the prior year's budget without changes for the current year.

Question

Quizplus · Accepted Answer

Zero-based budgeting requires managers to justify all budgeted expenditures from scratch, rather than just making changes to last year's budget. This encourages a focus on the most essential expenses and can lead to cost savings. Budgets in zero-based budgeting do include financial components and are not limited to product units only. Option C is incorrect as the process does not start with the prior year's budget but rather requires a fresh look at all expenses. Option D is also incorrect as managers are not allowed to use the prior year's budget as a starting point.

Which of the Following Statements Is True About Zero-Based Budgeting