When each new budget is based on the dollar amounts contained in the budget from the preceding year, a company is using ____ budgeting.
A) zero-base
B) traditional
C) cash
D) capital
E) production

Question

Quizplus · Accepted Answer

Traditional budgeting involves basing the new year's budget on the dollar amounts from the previous year's budget. This method assumes that last year's budget was accurate and adjusts it based on any changes in the upcoming year. Zero-base budgeting, on the other hand, requires managers to justify all expenses from scratch each year. Cash and capital budgeting focus on specific areas of the company's finances, and production budgeting focuses on forecasting the amount of goods to produce.

When Each New Budget Is Based on the Dollar Amounts