Zero-Based Budgeting Is an Established Approach to Planning and Decision-Making

question 10

Multiple Choice

Zero-based budgeting is an established approach to planning and decision-making that requires managers to justify every _____ on a budget, it does not allow for ______ or accruals and applying a percentage uplift.

• A)
• line item
• B)
• payment
• C)
• tax receipt
• D)
• customer complaint
• E)
• prior budgets

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Definitions:

Minimum Required Rate

The lowest return acceptable on an investment, reflecting the investor's risk appetite and cost of capital.

Net Operating Income

A rephrased description: Operating profit after deducting operating expenses but before interest and taxes.

Operating Assets

Assets that are used by a company in its day-to-day operations to generate revenues, such as buildings, machinery, and equipment.

Minimum Required Rate

The lowest return rate that a project or investment must yield to be considered viable or acceptable.