Zero base budgeting: A revolutionary concept of planning the future activities

Abstract

Zero Base Budgeting is a formalized system of budgeting for the activities of an enterprise as if each activity were being performed for the first time i.e. from zero-base, under this system a number of alternatives for each activity are identified, costed and evaluated in terms of the benefits to be obtained form them. It is based on the premise that every rupee of expenditure requires justification. It reverses the working process of traditional budgeting. No reference is made to previous level of expenditure. Now-a-days, this system of budgeting is being considered as a revolutionary concept of planning the future activities.