Answer (B) is correct . Zero-based budgeting is an effective means of bringing objective thinking to the budgeting process. The principal advantage of this approach is that managers are forced to review each program in its entirety at the beginning of every budget period, rather than merely extrapolate historical figures.
Answer (A) is incorrect because Flexible budgeting prepares budgets for varying levels of productivity.
Answer (C) is incorrect because Continuous budgeting extends budget estimates at interim dates so that a budget for a specified period, usually 12 months, is always available.
Answer (D) is incorrect because Probabilistic budgeting bases budgets on the most likely levels of activity.
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