Answer:

Zero-Based Budgeting

Zero-Based Budgeting (ZBB) is a budgeting process in which all expenses must be justified for each new period. Unlike traditional budgeting which bases current expenses on prior period spending, Zero-Based Budgeting requires a justification of all expenses from the ground up, regardless of whether it is a new or existing item. This process ensures that each expense is thoroughly evaluated and allows budgeters to accurately allocate resources to areas of greatest need.

Benefits of Zero-Based Budgeting

Zero-Based Budgeting offers several benefits to budgeters. Firstly, it can help organizations identify and eliminate wasteful spending. Secondly, it can help budgeters identify areas of potential cost savings and increase operational efficiency. Finally, it can create a more transparent and accountable budgeting process.

Implementing Zero-Based Budgeting

Implementing Zero-Based Budgeting can be a complex process for organizations. It requires budgeters to evaluate each line item in the budget and justify the expenses. Additionally, it requires budgeters to have a thorough understanding of the organization’s goals and objectives as well as the resources available to achieve them.

Advantages & Disadvantages of Zero-Based Budgeting

The main advantage of Zero-Based Budgeting is that it allows budgeters to allocate resources to areas of greatest need. Additionally, it can help organizations identify and eliminate wasteful spending and create a more transparent and accountable budgeting process. The main disadvantage of Zero-Based Budgeting is that it can be a complex and time-consuming process.

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