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 a budgeting technique in which all expenses must be justified for a new period or year starting from zero, versus starting with the previous budget and adjusting it as needed.

Detailed explanation-3: -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.

Detailed explanation-4: -In zero-based budgeting, planning is done from scratch each time. This means that you start at 0 and do not use the previous year’s values as a basis, as is the case with classical budget planning. This means that the financial resources for the next planning period are always reconsidered.

Detailed explanation-5: -In zero-based budgeting every function is analyzed for its needs and costs. Hence statement 2 is correct. In a zero-based Budget, no balances are carried forward, or there are no pre-committed expenses.