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Question
The process of budget making after re-evaluating every item of expenditure in every financial year is known as ___________.
The process of budget making after re-evaluating every item of expenditure in every financial year is known as ___________.
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Solution
The correct option is D zero based budgeting
Conceptually, zero-based budgeting means re-evaluating every line item of cash flow statement and justifying all the expendtiure.
Similarly, in budgeting under this approach, all the expenses for the new period are calculated on the basis of actual expenses that are to be incureed and not on the incremental basis which involves just increasing the expenses incured in the previous year at the some fixed rate.
Under this budgeting, every expenditure needs to be explained in the portion of what revenue every cost will generate.
Conceptually, zero-based budgeting means re-evaluating every line item of cash flow statement and justifying all the expendtiure.
Similarly, in budgeting under this approach, all the expenses for the new period are calculated on the basis of actual expenses that are to be incureed and not on the incremental basis which involves just increasing the expenses incured in the previous year at the some fixed rate.
Under this budgeting, every expenditure needs to be explained in the portion of what revenue every cost will generate.
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