Human Resources Certification Institute (HRCI) Practice Exam

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Study for the HRCI Exam. Enhance HR knowledge with multiple choice questions and explanations. Prepare effectively for your certification!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

Which type of budget starts from scratch each year?

Incremental
Bottom up
Zero-based
Top-down

The correct answer is: Zero-based

Zero-based budgets require each department to justify its entire budget, regardless of whether the total budget is higher or lower than the previous year. This differs from incremental budgets (option A), which only adjust for changes from the previous year. Bottom-up budgets (option B) involve each department creating its own budget and then combining them at the executive level, while top-down budgets (option D) involve creating a budget from the top down, typically with limited input from lower level departments. Therefore, zero-based budgets specifically start from scratch each year, making it the correct answer.