Juwan is updating the budget for Pittman's Cycle Shop. His manager has told him that a new piece of equipment has been purchased with a monthly loan payment of $123.50 for the next six months. Juwan adds the new payment to the budget and returns the budget to his boss, Laura. Laura tells him that he cannot just add the new expense, but that instead he must review the budgeted amounts in different categories so that both budgeted revenue and budgeted expenses balance. Which of the following is true?
A) Laura is explaining how a zero-based budget is developed.
B) Pittman's Cycle Shop is using a participative budget.
C) The addition of a new payment has caused Juwan to use an imposed budget.
D) The budget for Pittman's Cycle Shop will be more realistic because of the changes Juwan will make.

Question

Quizplus · Accepted Answer

To create a zero-based budget, the revenues and expenses must be reviewed to ensure that revenues minus expenses equal zero.

Juwan Is Updating the Budget for Pittman's Cycle Shop