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.

Question

Quizplus · Accepted Answer

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.

Zero-Based Budgeting Refers to