Which budgeting approach starts from a zero base for each decision package?

Which budgeting approach starts from a zero base for each decision package?

• A. Incremental budgeting
• B. Rolling budgeting
• C. Zero-based budgeting
• D. Periodic budgeting

Answer: (C)

Starting from a zero base for every decision package means you justify each cost from scratch for the period, rather than basing it on the previous year’s spending. This is the essence of zero-based budgeting, where every activity must prove its value and necessity before any funds are allocated. It helps reveal waste and reallocates resources to the most important objectives. By contrast, incremental budgeting starts from the prior period’s budget and only adjusts it, rolling budgeting updates the forecast over time, and periodic budgeting refers to regular budgeting cycles without the requirement to reset from zero.

Starting from a zero base for every decision package means you justify each cost from scratch for the period, rather than basing it on the previous year’s spending. This is the essence of zero-based budgeting, where every activity must prove its value and necessity before any funds are allocated. It helps reveal waste and reallocates resources to the most important objectives. By contrast, incremental budgeting starts from the prior period’s budget and only adjusts it, rolling budgeting updates the forecast over time, and periodic budgeting refers to regular budgeting cycles without the requirement to reset from zero.