Which budgeting method ensures that all expenses are justified for each period?

The budgeting method that ensures all expenses are justified for each period is zero-based budgeting. This approach requires that every expense must be reviewed and approved for each new budgeting period, starting from a "zero base," rather than adjusting previous budgets. It encourages companies to analyze the necessity and justification of each expense, promoting efficiency by allocating resources based on current needs and priorities rather than historical spending patterns.

This method contrasts with approaches like incremental budgeting, where the previous period's budget is simply adjusted by adding or subtracting amounts, and traditional budgeting, which often relies on established patterns without questioning the legitimacy of ongoing expenses. Flexible budgeting adjusts for changes in volume or activity but doesn't require the same level of justification for each line item as zero-based budgeting does. Consequently, zero-based budgeting is particularly effective in ensuring that every dollar spent aligns with current goals and priorities.