US CMA Part 1 · Chapter 2 · Question 19 of 30
Which budgeting approach requires every expenditure to be justified from a base of zero in each budget period, rather than starting from the prior year's amount?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Zero-based budgeting
Explanation
Zero-based budgeting requires managers to justify each activity and its cost afresh, which helps eliminate wasteful spending. Incremental budgeting starts from last year's figures, rolling budgets add a new period as one ends, and flexible budgets adjust for activity levels.
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