Answer the following statements true (T) or false (F)
1. The most popular form of budgeting is known as zero-based budgeting.
2. Incremental budgeting requires setting up many budgets based on short periods, which together make up the full resource requirement.
3. One difficulty with incremental budgets is that they tend to lock departments into stable spending arrangements.
4. An expense budget anticipates investment in major assets such as land, buildings, and major equipment.
1. FALSE
Managers can take essentially two budget-planning approaches. One of them, zero-based budgeting (ZBB), which forces each department to start from zero in projecting funding needs, is no longer favored. Incremental budgeting is mainly used now.
2. FALSE
Incremental budgeting allocates increased or decreased funds to a department by using the last budget period as a reference point; only incremental changes in the budget request are reviewed.
3. TRUE
One difficulty is that incremental budgets tend to lock departments into stable spending arrangements; they are not flexible in meeting environmental demands.
4. FALSE
A capital expenditures budget anticipates investments in major assets such as land, buildings, and major equipment.
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