Some commentators argue that: ‘With continuing pressure to control costs and maintain efficiency, the time has come for all public sector organisations to embrace zero-based budgeting. There is no longer a place for incremental budgeting in any organisation, particularly public sector ones, where zero-based budgeting is far more suitable anyway.’Required:
(b) Explain the terms ‘incremental budgeting’ and ‘zero-based budgeting’. (4 marks)
参考答案：Incremental and zero-based budgeting‘Incremental budgeting’ is the term used to describe the process whereby a budget is prepared using a previous period’s budget or actual performance as a base, with incremental amounts then being added for the new budget period.‘Zero-based budgeting’, on the other hand, refers to a budgeting process which starts from a base of zero, with no reference being made to the prior period’s budget or performance. Every department function is reviewed comprehensively, with all expenditure requiring approval, rather than just the incremental expenditure requiring approval.