Zero-base budgeting (ZBB) is a method of budgeting where all expenses must be justified for each new period. Every function within an organization is analyzed for its needs and costs, and budgets are built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one. It starts from a "zero base" and each item in the budget is justified as if it were a new expense. This contrasts with traditional budgeting, where managers often start with the previous year's budget and justify only increases. Functional budgeting refers to creating budgets for specific functions or departments. Master budgeting is a comprehensive budget that includes all functional budgets and projected financial statements.