define zero-base budgeting and define target-base budgeting. Compare and contrast the two

Expert Solution

Zero based budgeting

Zero-based budgeting is a method of budgeting in which all expenses must be justified for upcoming period. This process starts from a "zero base," and every department within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether each budget is higher or lower than the previous one.

Here, budget depends on the requirement unlike target based where budget target is fixed.

Target Based budgeting

It was introudcted by US president Ronald Reagan in year 1980. In target based budgeting, president fixed targets of expenditure for depts and ministries on the basis of revenues of govt ensuring that expenditure is not more than revenue.

Deficits were controlled through political commitments

Department and ministries were made accountable for their performances

This helped US to come out of crisis

jeff jeffy answered 6 months ago

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