Which budgeting method requires all expenses to be justified at the beginning of the cycle?

• A. Annual budget
• B. Program budgeting
• C. Zero based budget
• D. Operation plan

Answer: (C)

Zero-based budgeting starts from a zero base each cycle, and every expense must be justified as if it were new. Departments or functions build the budget from the ground up, presenting decision packages that explain the purpose, necessity, expected results, and costs. This approach enforces comprehensive scrutiny of all spending right at the start of the cycle, ensuring resources go to activities that truly need them and provide value.

This is why it’s the best fit for the requirement. Other methods don’t mandate re-justifying every item from zero at the beginning: an annual or incremental budget typically adjusts the prior year’s numbers rather than re-evaluating every expense from scratch; program budgeting centers on funding by program’s goals and outcomes but doesn’t inherently require starting from zero for every line item; an operating plan focuses on executing planned actions and may distribute funds accordingly but isn’t defined by a zero-base justification for every expense.