Practicing Success
Practicing Success
CUET Preparation Today
| Under this method of budgeting process, the operation must justify and document every item of expenditure and income anew-as if no history existed. This budgeting process is known as: |
Traditional Budgeting Process Historical Budgeting Process Zero based Budgeting Expenditure Budget |
| Zero based Budgeting |
| The two dominant forms of budgeting processes are traditional and zero-based. Business planning is usually a combination of the two. Traditional budgeting is based on a review of historical performance and then the projection of such findings to the future with modifications. If inflation is high, for instance, cost trends of the last several years are projected forward but with adjustments both for inflation and for projected growth or decline in business activity. Historical sales patterns, using established trends in sales growth, are projected; new sales from planned new product introductions are then added. Zero-based budgeting is the creation of a completely new budget from the ground up—as if no history existed. When using this method, the operation must justify and document every item of expenditure and income anew. |
