Consider the following statements about Zero Based Budgeting ZBB method 1 It starts with the budget ...........

Indian Geography (Easy) Agriculture

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Consider the following statements about Zero Based Budgeting (ZBB) method:

1. It starts with the budget from the last financial year.

2. Every activity needs to be justified.

Which of the statements given above is/are correct?

1 ONLY

2 ONLY

BOTH

NONE

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Explanation:

Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. Zero-based budgeting starts from a zero base and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one.