Zero-based budgeting starts from what premise?

Zero-based budgeting starts from what premise?

• A. The next year's budget is zero
• B. The next year's budget equals current year's budget
• C. The next year's budget is based on last year's data only
• D. The next year's budget is maximum possible within constraints

Answer: (A)

Zero-based budgeting builds the next year’s budget from a zero base, requiring every expense to be justified as if there were no previous budget. Nothing is carried forward by default; funding allocations are re-evaluated in light of current needs and priorities. This is why starting from zero is the fundamental premise. It differs from incremental budgeting, which starts with last year’s budget and adjusts it up or down.

Zero-based budgeting builds the next year’s budget from a zero base, requiring every expense to be justified as if there were no previous budget. Nothing is carried forward by default; funding allocations are re-evaluated in light of current needs and priorities. This is why starting from zero is the fundamental premise. It differs from incremental budgeting, which starts with last year’s budget and adjusts it up or down.