In an objects of expenditure budget, all of the various types of goods and services which must be acquired and used by an organization are itemized in the budget (Lynden, & Lindenberg, 1983, p. 66). The original motivation for this budget format, and still the greatest advantage of this type of budget is that it opens to public exposure exactly what it is that money is used to buy by non-profit and public sector organizations. The disadvantage of this budget format is that it makes no effort to assess the effectiveness or the efficiency of the expenditures included.

For the manager, an objects of expenditure budget requires that he or she justify things, as opposed to justifying what it is that an organization does, or is supposed to do. On the other hand, this budget format tends to keep managers honest.

A performance budget is, like the objects of expenditure budget, an incremental budget. A performance budget, in contrast to the objects of expenditures budget, emphasizes the functions of the organization (Lynden, & Lindenberg, 1983, p. 66). It is these functions which are budgeted, as opposed to the items required to perform the functions, which are funded in the objects of expenditure budget format. The functions of an organization are tied directly to its missions and objectives.

The advantage of the program budget format is that it places costs on functions. People are able to see

Austin, L. A., & Cheek, L. M. (1984). Zero-base budgeting: A decision package manual, Rev. Ed. New York: AMACOM.

Thus, under the ZBB concept, no costs or expenditures are viewed as being on-going in character. All costs must be justified with each new budget. This justification is accomplished through a series of decision packages, in which each manager ranks, from the top down, all activities of a budgeting unit according to the relative importance of the activity. This process is supposed to permit the top management in an organization to evaluate each decision package separately, and to eliminate or cut-back those activities which are least essential to the organization, in those situations where all activities cannot be funded.

In spite of the promise of ZBB, it has proved to be a difficult format to use in practice. For that reason, it is probable that the incremental budget formats will continue as the formats of preference for nonprofit, and public sector organizations.