The salient features of Zero Base Budgeting are:

A. It is a decision oriented approach

B. The decision unit is broken into understandable decision packages which are ranked according to importance

C. The responsibility is shifted from top management to the manager of the decision unit 

D. It is an accounting oriented approach

E. Top management decides why a particular amount of money should be spent on a particular decision unit

Choose the correct answer from the options given below:

Budgeting is the process of designing, implementing and operating a budget. The main emphasis in the budgeting process is the provision of resources to support plans that are being implemented.

Key Points

Zero-based Budgeting is defined as a method of budgeting which requires each cost element to be specifically justified, though the activities to which the budget relates are not being undertaken for the first time. It is an activity-based budgeting system where budgets are prepared for each activity rather than functional departments.

 The salient features of Zero-Based Budgeting are:

• It is a decision-oriented approach as it includes identification and description of decision packages for which the decision is required to be taken.
• The decision unit is broken into understandable decision packages which are ranked according to importance because once decisions are identified and described their evaluation is done on the basis of priority of the activities. Due to this feature, it is also known as Priority-based Budgeting.
• The responsibility is shifted from top management to the manager of the decision unit as it provides an opportunity to them to allocate resources for various activities only after having a thorough cost-benefit analysis.
• Zero Based Budgeting very rational in nature.
• It is in traditional budgeting that top management decides why a particular amount of money should be spent on a particular decision unit.

Thus, the correct answer is A, B and C only.

Additional Information
 Zero Based Budgeting is suitable for both corporate and non-corporate entities. For example: In case of corporate entities, it is best suited for discretionary costs like research and development cost, advertisement and in case of non-corporate entities like government departments, local bodies etc.