zero based budgeting (ZBB)
Definition
Method for preparing cash flow budgets and operating plans which every year must start from scratch with no pre-authorized funds. Unlike the traditional (incremental) budgeting in which past sales and expenditure trends are assumed to continue, ZBB requires each activity to be justified on the basis of cost-benefit analysis, assumes that no present commitment exists, and that there is no balance to be carried forward. By forcing the activities to be ranked according to priority, ZBB provides a systematic basis for resource allocation.
zero based budgeting (ZBB) is in the Accounting & Auditing, Banking, Commerce & Finance and Planning & Scheduling subjects.
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