Which budgeting approach requires justification only for expenditures that exceed the previous budget period?

• A. Incremental budget
• B. Line-item budget
• C. Planning programming budget
• D. Zero-based budget

Answer: (A)

Incremental budgeting uses the previous year's budget as the starting point, and you justify only the changes from that baseline. If a department wants to spend more than last year on a particular area, that increase needs explanation, while the rest of the budget remains as it was. This makes planning quicker and stable when needs don’t change much, but it can keep inefficiencies or outdated priorities if the base wasn’t challenged recently. In contrast, a line-item budget focuses on justification for each specific category, planning-programming-budgeting ties spending to programs and outcomes, and zero-based budgeting requires justification for every expense from zero each period.