The creation of a budget that evaluates each expense from a zero base is called?

The correct answer is zero-based budgeting. This budgeting method requires that each expense be justified for each new period, starting from a "zero base." In practice, this means that every department must reevaluate its needs and justify all of its proposed expenses, rather than simply using the previous year's budget as a starting point. This approach can lead to more efficient allocation of resources and help organizations prioritize spending based on current needs and objectives rather than historical patterns.

Zero-based budgeting encourages critical analysis of every function within an organization and focuses on the necessity and efficiency of expenditures. It contrasts with other budgeting methods where past budgets serve as a baseline, potentially leading to continued funding of inefficient or unnecessary expenditures.