Which budgeting approach is characterized by questioning the necessity of each expense during the budget planning process?

Zero-based budgeting is a budgeting approach that requires all expenses to be justified and approved for each new period, rather than being based on prior budgets or historical expenditures. This method begins from a "zero base," meaning that every function within an organization is analyzed for its needs and costs, and every expense must be justified as if it were new, rather than simply adjusting previous budgets.

This approach allows organizations to prioritize their spending, focusing on programs and expenditures that align with their current goals and efficiency. It encourages critical assessment of all operations and can lead to the redirection of funds from less necessary areas to those that provide higher value, increasing overall effectiveness in resource allocation.

Other budgeting approaches, while they may include some level of review, do not engage in this rigorous questioning of each individual expense. Incremental budgeting typically adjusts prior budgets with minor changes rather than reevaluating each expense from scratch. Traditional budgeting closely resembles incremental but tends to follow set formats and prior year patterns. Program budgeting focuses on the expenditures related to specific programs, but still relies on historical data for budget formulation rather than starting from a zero base.