Adult-Gerontology Clinical Nurse Specialist (CNS) Practice Exam

What budgeting approach allocates funding based on program necessity rather than history?

1. Variable budgeting

2. Prospective budgeting

3. Zero-base budgeting

4. Relative-weight budgeting

The correct answer is: Zero-base budgeting

Zero-base budgeting is a financial management method that requires each budget to be built from the ground up, starting from a "zero base." This means that every department must justify its budget requests for each new period, rather than simply adjusting previous budgets based on historical spending. The focus is on program necessity and the specific goals and objectives of an organization, ensuring that each expense is aligned with current priorities and operational needs. This approach allows for a more rational allocation of resources, as it encourages thorough evaluation of each program's value and contribution to the organization. This method contrasts with traditional budgeting techniques that often rely on historical data and prior expenditures, which can lead to inefficiencies and funding of less impactful programs simply because they have been financed in the past. By using zero-base budgeting, organizations can achieve better cost management and drive performance improvements through strategic funding decisions.