Check Your Knowledge

Print this page

Question 3

One significant disadvantage associated with zero-based budgeting is:

Click the button next to the correct answer choice. After you have read the feedback, explore the other choices. Note: Your first selection will be used in tallying your score.  

  • Its in-depth analysis

  • Not the best choice. The in-depth analysis that characterizes a zero-based budget is actually an advantage, not a disadvantage. It means that the budget is typically more accurate than an incremental budget because of the additional consideration each element receives. The significant disadvantage associated with zero-based budgeting is the additional time required to justify each line item during every budgeting period.

  • Its overall accuracy

  • Not the best choice. The overall accuracy that characterizes a zero-based budget is actually an advantage, not a disadvantage. This accuracy (which is greater than that of an incremental budget) stems from the additional consideration each element receives. The significant disadvantage associated with zero-based budgeting is the additional time required to justify each line item during every budgeting period.

  • Its time costs

  • The best choice

    Correct choice. One problem that occurs with zero-based budgeting is that the time involved in the budget preparation process can overwhelm planners, making implementation difficult. Managers have to balance the need for increased accuracy with the time required to collect further information.

Click here to exit the program. Warning, this will close your session. You will be able to return to the course, but any evaluation of your progress/performance will not count after you have clicked this button.