Incremental Budgeting & Zero Based Budgeting

Question 1

Zero-based budgeting and Incremental budgeting are the most commonly used budgeting methods by successful companies. Zero-based budgeting is the type of budgeting where the budget preparation starts from the scratch and it starts with a zero base. This budgeting method

always begins a new budget from a conventional point of zero. In this case, the new and the old activities are ranked based on their importance in the organization. Notably, resource allocation is done without considering any past budgets and past performances (McNally 37-42).