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Answer Posted / dimple
A method of budgeting in which all expenses must be justified for each new
period. Zero-based budgeting starts from a "zero base" and every function
within an organization is analyzed for its needs and costs
Zero-base budgeting does not use the previous year's budget or expenses in
setting a new budget, since the company’s circumstances and finances may
have changed. When building a budget from a zero base, every expense must be
justified. Zero-base budgeting helps you control spending and expenses
because you build your budget from zero rather than building your budget on
top of what was spent during the prior period funded.
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