Which budgeting method requires that expected expenditures and income be fully justified year over year?

Which budgeting method requires that expected expenditures and income be fully justified year over year?

• A. Continuous budget
• B. Zero-Based Budget
• C. Incremental budget
• D. Per diem budget

Answer: (B)

Zero-based budgeting starts from a clean slate each planning cycle, so every expenditure and income item must be justified anew rather than carried forward from the previous year. Departments build their budgets from zero, detailing purpose, expected outputs, and measurable benefits for every cost. This forces a thorough review of all activities, helping to eliminate unnecessary or obsolete spending and ensure resources align with current priorities. Other methods differ: a continuous budget is a rolling forecast updated over time, not a complete re-justification of every item; an incremental budget uses last year’s numbers as the base with only small adjustments; a per diem budget sets daily allowances rather than re-evaluating all expenditures annually.

Zero-based budgeting starts from a clean slate each planning cycle, so every expenditure and income item must be justified anew rather than carried forward from the previous year. Departments build their budgets from zero, detailing purpose, expected outputs, and measurable benefits for every cost. This forces a thorough review of all activities, helping to eliminate unnecessary or obsolete spending and ensure resources align with current priorities. Other methods differ: a continuous budget is a rolling forecast updated over time, not a complete re-justification of every item; an incremental budget uses last year’s numbers as the base with only small adjustments; a per diem budget sets daily allowances rather than re-evaluating all expenditures annually.