Which budgeting format starts from a 'zero base' and requires justification for each budget line item?

The zero-based budget is a budgeting method that begins from a "zero base," meaning that every expense must be justified and approved for each new period, rather than simply adjusting the previous year's budget. This approach requires that all budget items be thoroughly analyzed and evaluated, ensuring that resources are allocated efficiently based on current needs and priorities rather than historical spending patterns.

This method encourages cost-consciousness, as it challenges managers to think critically about what is necessary for operations, aligning expenditures with the organization's goals rather than rolling over past budgets without reevaluation. By requiring justification for each line item, the zero-based budgeting process can lead to more informed and strategic allocation of resources, ultimately supporting better financial management within an organization.