The correct option is (B); Questions each activity and determines whether it should be maintained as it is, reduced, or eliminated.
<h3>What is zero-based budgeting (ZBB)?</h3>
Zero-based budgeting (ZBB) is a budgeting strategy that entails creating a fresh budget from scratch each time, or from "zero," as opposed to beginning with the budget from the prior month and making adjustments as necessary.
Key features of zero-based budgeting are-
- The zero-based budgeting (ZBB) methodology helps companies match their spending to their strategic objectives.
- According to this methodology, firms must create their yearly budget from scratch each year in order to ensure that all of its components are affordable, pertinent, and capable of generating increased savings.
- With zero-based budgeting, each budgeting cycle is started at zero.
- This strategy requires explanation of all expenses, not just new ones.
- The quickest path to achieving your financial objectives is still with a thorough spending strategy.
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The correct question is-
The major feature of zero-based budgeting (ZBB) is that it
A. Takes the previous year’s budgets and adjusts them for inflation.
B. Questions each activity and determines whether it should be maintained as it is, reduced, or eliminated.
C. Assumes all activities are legitimate and worthy of receiving budget increases to cover any increased costs.
D. Focuses on planned capital outlays for property, plant, and equipment.
