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Question
Q. Consider the following statements with respect to Zero Based Budgeting (ZBB):
Which of the statements given above is/are correct?
Q. Consider the following statements with respect to Zero Based Budgeting (ZBB):
Which of the statements given above is/are correct?
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Solution
The correct option is D Neither 1 nor 2
Explanation:
Statement 1 is incorrect: ZBB refers to planning and preparing the Budget from a ‘zero base’. It is different from a traditional Budget as they are based on previous Budgets. The process of zero-based budgeting involves review and justification of each and every ministry’s expenditure in order to receive funding at the beginning of each financial year.
Statement 2 is incorrect: Under ZBB, since there are no pre-committed expenses, no balances are carried forward. Simply put, it is a procedure for preparing a Budget with zero prior bases.
Explanation:
Statement 1 is incorrect: ZBB refers to planning and preparing the Budget from a ‘zero base’. It is different from a traditional Budget as they are based on previous Budgets. The process of zero-based budgeting involves review and justification of each and every ministry’s expenditure in order to receive funding at the beginning of each financial year.
Statement 2 is incorrect: Under ZBB, since there are no pre-committed expenses, no balances are carried forward. Simply put, it is a procedure for preparing a Budget with zero prior bases.
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