ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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This type of budget is less complicated than other types of budgets
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A zero-based budget allows less money for wants
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Sticking to a zero-based budget requires less discipline
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The zero-based budget ensures that every dollar you make is assigned a specific purpose
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Detailed explanation-1: -A zero-based budget allows less money for wants. Sticking to a zero-based budget requires less discipline. The zero-based budget ensures that every dollar you make is assigned a specific purpose. The zero-based budget ensures that every dollar you make is assigned a specific purpose.
Detailed explanation-2: -Benefits of Zero-Based Budgeting Zero-based budgeting ensures that managers think about how every dollar is spent, every budgeting period. This process also forces them to justify all operating expenses and consider which areas of the company are generating revenue.
Detailed explanation-3: -The aim of a zero-based budget is to make sure that your income, minus all your overheads, equals zero (income – expenses = zero). This method of budgeting allows you to easily adapt your budget each month if your expenses change.
Detailed explanation-4: -ZBB is a highly effective business-planning tool to help a company identify and eliminate unnecessary costs, keep control of your spending, and focus on high-profit initiatives. Budgeting, including ZBB, is the tactical implementation of a company’s strategic plan.
Detailed explanation-5: -Zero based vs traditional budgeting By contrast, zero-based budgeting starts fresh each period with its ‘zero base’ and is more detail-oriented as a result. This ensures that even recurring expenses are given proper scrutiny and justification. For businesses on a tighter budget, this can help cut unnecessary costs.