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Zero-based budgeting is a budgeting approach that requires all expenses to be justified for each new period, starting from a "zero base." This means that every department or unit must build its budget from the ground up, rather than simply adjusting the previous year's budget. The focus is on creating a budget that reflects the current priorities and needs rather than relying on historical expenditure patterns.

This method encourages a thorough evaluation of all programs and projects, assessing their necessity and efficiency. Each expenditure must be justified in terms of costs and benefits, which helps to eliminate unnecessary spending and redirect funds to higher priority areas. By starting from zero, zero-based budgeting also ensures that every activity of the organization is evaluated for its value, leading to more strategic resource allocation. This is particularly useful in environments where resources are limited and tough decisions on funding allocations need to be made.

In contrast, the other budgeting methods listed typically rely on historical data or incremental changes from previous budgets, which may not reflect current needs or priorities effectively.