Question

Accounting for the receipt and timing of all sources and expenditures of cash is known as zero-base budgeting.

a) True
b) False

Answer 1

False

Zero-base budgeting does not account for all sources and expenditures; it is a method where new budget cycles start from a 'zero base' with all expenses needing justification, differing from traditional budgeting methods.

Step-by-step explanation:

False. Accounting for the receipt and timing of all sources and expenditures of cash is not known as zero-base budgeting. Zero-base budgeting is a method where all expenses must be justified and approved for each new period, starting from a 'zero base', with no reference to previous spending patterns. On the other hand, traditional budgeting processes often take the prior year's budget as a starting point, and adjustments are made based on new financial goals and any changes in economic circumstances.

The budget is a statement of policy goals and priorities for the fiscal year, including anticipated receipts (revenue) and expenditures (outlays). Receipts mainly come from taxes and other revenue sources, while expenditures represent what the government plans to spend. Understanding the differences between budgeting methods is important for financial literacy and public policy awareness.