Periodic review of business functions is required regardless the type of budget development approach used.
Zero-based budgeting is the budgeting method in which the current year's budget is prepared without any reference to, or use of, the prior period's budget or actual amounts. Incremental budgeting assumes that the previous period's budgeted or actual results are satisfactory, and the budget is calculated by adjusting the previous period budgeted or actual amount by a number, for example 1.1, to allow for changes planned for the new budgeting period. Thus, it is easier to prepare an ncremental budget and less managerial effort is consumed than when the budget is prepared under the ZBB concept.
This is an advantage of zero-based budgeting, not incremental budgeting.
There is no difference of new project treatment under both of these budget development approaches.
|
