Which characteristic is an advantage of zero-based budgeting?

• A. Requires that every cost be justified
• B. Increases complexity and reduces accountability
• C. Guarantees no budget gaps
• D. Is always quicker than incremental budgeting

Answer: (A)

Zero-based budgeting rests on starting from zero and requiring every cost to be justified for the new period, rather than assuming current expenditures will simply continue. That forcing function makes it advantageous because managers must defend why each expense is needed, which pushes resources toward activities that truly support current goals and prevents automatic carryovers of unnecessary spending. In this way, spending is more clearly linked to value and priorities.

Keep in mind, though, the process can be more time-consuming and complex since every cost is reviewed anew. It does not guarantee there will be no budget gaps, as priorities can shift or funding constraints can appear. And it isn’t necessarily quicker than incremental budgeting; it’s often slower due to the thorough justification required for every item.