What is zero-based budgeting?

  • Allocating funds based on historical spending patterns
  • Allocating funds based on projected future needs
  • Budgeting method where each expense must be justified for each new period
  • Setting budgets without considering previous expenditures
Zero-based budgeting is a budgeting method where each expense must be justified for each new period, unlike traditional budgeting methods where previous expenditures serve as a baseline. This approach requires departments to justify all expenses, starting from a "zero base," ensuring resources are allocated efficiently.
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