Which term describes the method of ensuring that previous funding is not automatically assumed in future budgets?

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Zero-based budgeting is a financial management technique where each new budget cycle starts from a "zero base." Instead of carrying over the previous year's budget and adjusting it for expected changes, every program or department must justify its funding needs and expenses from scratch. This method ensures that all expenditures are carefully evaluated and prioritized according to their necessity for achieving organizational goals, rather than simply assuming that past funding levels will continue.

This approach encourages cost-effective allocation of resources and helps to identify areas where cuts can be made or where funding may not be necessary based on performance or changing priorities. By forcing the justification for all expenditures, zero-based budgeting prevents complacency in spending and promotes accountability, as it requires all departments to provide evidence of their operational needs without assuming historical budget allocations.

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