Human Resources Certification Institute (HRCI) Practice Exam

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Ace your HRCI certification with our comprehensive practice exams. Featuring detailed questions with hints and explanations, our tests are designed to prepare you thoroughly for your big day.

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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.