ICANManagement InformationBudgeting and Budgetary Control2024

Under a system of Zero-Based Budgeting (ZBB), which of the following statements is MOST accurate?

AEach budget period begins with the previous year's approved budget as a baseline, adjusted for inflation
BEvery activity must be justified from scratch each budget period, regardless of prior-year expenditureCORRECT
COnly capital expenditure items are subjected to fresh justification while recurrent costs are rolled forward
DZBB is mandated for all public sector entities in Nigeria under the Finance Act 2021
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Why the answer is B, and why the others tempt you.
Zero-Based Budgeting requires managers to justify all expenditure from a zero base for each new budget period, without reference to prior-year spending. This distinguishes it from incremental budgeting (Option A). ZBB applies to all cost categories, not just capital expenditure (Option C). While ZBB is encouraged in the Nigerian public sector, it is not specifically mandated by the Finance Act 2021 for all entities (Option D).
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