Which of the following is correct?

Analyze the question: You are asked to pick the true statement about traditional budgeting and zero-based budgeting (ZBB).

Concept:

• Traditional (incremental) budgeting: Starts from last year's budget or actual spending and adjusts it up or down, usually for inflation or expected changes. It focuses on line items (what is spent), not on goals.
• Zero-based budgeting (ZBB): Every activity must be justified from scratch each period, as if the budget were starting at zero. It focuses on objectives and results, considers alternatives, and prepares multiple levels of funding (decision packages) for each activity.

Checking each option:

• A. Traditional budgeting focuses on goals and objectives. False. This describes ZBB or programme budgeting. Traditional budgeting focuses on line items and inputs.
• B. ZBB produces a single level of appropriation for an activity. False. ZBB typically produces several levels of funding (minimum, current, enhanced) for each activity.
• C. Traditional budgeting starts with last year's funding appropriation. True. This is the definition of incremental budgeting: last year's figure is the base.
• D. ZBB does not systematically consider alternatives to current operations. False. ZBB does systematically consider alternative ways of carrying out activities.

Answer: Option C is correct.

Tip: Remember "Traditional = Taken from last year" (incremental). "Zero-based = Zero start, justify everything." If an option says ZBB ignores alternatives or gives only one funding level, it is almost certainly a trap.