Answer Posted / kishore g
Zero-based budgeting is a technique of planning and
decision-making which reverses the working process of
traditional budgeting. In traditional incremental budgeting,
departmental managers justify only increases over the
previous year budget and what has been already spent is
automatically sanctioned. By contrast, in zero-based
budgeting, every department function is reviewed
comprehensively and all expenditures must be approved,
rather than only increases.[1] No reference is made to the
previous level of expenditure. Zero-based budgeting requires
the budget request be justified in complete detail by each
division manager starting from the zero-base. The zero-base
is indifferent to whether the total budget is increasing or
decreasing.
The term "zero-based budgeting" is sometimes used in
personal finance to describe "zero-sum budgeting", the
practice of budgeting every dollar of income received, and
then adjusting some part of the budget downward for every
other part that needs to be adjusted upward.
Zero based budgeting also refers to the identification of a
task or tasks and then funding resources to complete the
task independent of current resourcing.
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