Definition:
Zero-base budgeting does not use the previous year's budget or expenses in setting a new budget, since the company’s circumstances and finances may have changed. When building a budget from a zero base, every expense must be justified. This differs from only having to explain the amounts requested in excess of the funding received during the prior year or quarter. Zero-base budgeting helps you control spending and expenses because you build your budget from zero rather than building your budget on top of what was spent during the prior period funded.
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