ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. The process of zero-based budgeting starts from a “zero base, ” and every function within an organization is analyzed for its needs and costs.

Detailed explanation-2: -Zero-based budgeting (ZBB) is an approach to making a budget from scratch. The budget is not based on previous budgets. Instead, the budget starts at zero. With zero-based budgeting, you need to justify every expense before adding it to the official budget.

Detailed explanation-3: -Definition: Zero Based Budgeting, also called ZBB, is the process of creating a budget from nothing without using the prior year’s budget or spending numbers. No activities are assumed to be untouchable. All expenses are judged and must be justified in order to remain in the budget.

Detailed explanation-4: -A zero-base budget requires managers to justify all of their budgeted expenditures.

Detailed explanation-5: -Zero-based budgeting starts from zero and calls for a justification of old, recurring expenses in addition to new expenditures. Zero-based budgeting aims to put the onus on managers to justify expenses, and to drive value for an organization by optimizing costs and not just revenue.