What is a defining feature of zero-based budgeting?

What is a defining feature of zero-based budgeting?

• A. It does not require justification of expenditures.
• B. The budget starts from zero and every expenditure must be justified.
• C. Every budget cycle starts at existing baseline and only small adjustments are made.
• D. It is the quickest budgeting method.

Answer: (B)

Zero-based budgeting starts from zero and requires every proposed expenditure to be justified as if it were new. Departments build their budgets from the ground up, evaluating whether each item is necessary and how it aligns with current priorities, rather than simply carrying forward last year’s funding. This rigorous justification helps identify waste and reallocate resources to the most important programs. The other descriptions don’t fit because not requiring justification undermines ZBB, starting from an existing baseline with small adjustments describes incremental budgeting, and speed isn’t the defining feature since ZBB is usually more time-consuming due to the detailed justification process.

Zero-based budgeting starts from zero and requires every proposed expenditure to be justified as if it were new. Departments build their budgets from the ground up, evaluating whether each item is necessary and how it aligns with current priorities, rather than simply carrying forward last year’s funding. This rigorous justification helps identify waste and reallocate resources to the most important programs. The other descriptions don’t fit because not requiring justification undermines ZBB, starting from an existing baseline with small adjustments describes incremental budgeting, and speed isn’t the defining feature since ZBB is usually more time-consuming due to the detailed justification process.