Eliminate all previous budget allocations
Start the budgeting process from scratch each year
Justify each expenditure based on current needs
Focus only on essential spending
Answer is Right!
Answer is Wrong!
The correct answer is: b) Start the budgeting process from scratch each year.
Zero-based budgeting (ZBB) is an approach to budgeting in which all expenses are justified for each new budget period, regardless of whether they were previously budgeted for. This differs from traditional incremental budgeting, in which the previous year’s budget is used as a starting point for the current year’s budget.
ZBB can be used by the Sikkim government to ensure that all expenditures are justified and that the budget is aligned with the government’s priorities. It can also help to identify areas where spending can be reduced.
Here is a brief explanation of each option:
- Option a) is incorrect because ZBB does not eliminate all previous budget allocations. Instead, it requires that all expenditures be justified for each new budget period.
- Option b) is the correct answer because ZBB requires that all expenditures be justified for each new budget period. This means that the budgeting process starts from scratch each year.
- Option c) is incorrect because ZBB does not require that each expenditure be justified based on current needs. Instead, it requires that all expenditures be justified for each new budget period.
- Option d) is incorrect because ZBB does not focus only on essential spending. Instead, it requires that all expenditures be justified for each new budget period.