Question

What is the primary characteristic that differentials a zero based budget from a conventional budget. A. A zero based budget does not take inflation into account. B. The zero based budget requires managers to re-justify every planned expenditure every year. C. A zero based budget rolls historical data forward. D. A zero based budget uses a fixed volume growth rate.

Answer 1

B. The zero based budget requires managers to re-justify every planned expenditure every year.

Step-by-step explanation:

A zero based budget is one that does not take into account historical data when it is considering the present year budget. Each departmental requirement is re-evaluated and a new amount is assigned as budget for the year.

However conventional budgets carryover the previous year's expenses as a base data point. This results in similar budgeting across years.

So the main difference between the two is that zero based budget requires managers to re-justify every planned expenditure every year.