Which budgeting approach requires each activity to be justified from the beginning of each budget period?
Correct answer: C. Zero-based budgeting
- A. Incremental budgeting
- B. Flexible budgeting
- C. Zero-based budgeting
- D. Rolling budgeting
Explanation
Zero-based budgeting starts with a zero base and requires managers to justify proposed expenditures. Incremental budgeting usually begins with the previous budget and adjusts it for expected changes.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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