Adult-Gerontology Clinical Nurse Specialist (CNS) Practice Exam

What is the most commonly used budgeting method?

1. Percentage-based.

2. Zero-based.

3. Growth-based.

4. Incremental.

The correct answer is: Incremental.

The incremental budgeting method is widely utilized because it builds on existing budgets from previous periods, making it relatively straightforward and easy to implement. This method involves taking the current year's budget and adjusting it upwards or downwards based on anticipated changes in costs or funding, which allows organizations to maintain continuity while adapting to new financial realities. Incremental budgeting is particularly advantageous in environments where historical spending patterns are stable and predictable, enabling more straightforward estimations of future expenditures. Moreover, incremental budgeting requires less time and less detailed analysis compared to methods like zero-based budgeting, where every expense must be justified anew each period. This efficiency is appealing for many organizations as it minimizes the resources spent on financial planning. It also helps in ensuring that ongoing programs and services continue to receive funding without the need for extensive justification, thus promoting stability in budgeting practices.