What characterizes "line-item budgeting"?

Line-item budgeting is characterized by its method of allocating funds to specific expense categories. This approach involves breaking down the budget into detailed line items, each representing a particular item of expenditure. It allows organizations to specify how much money is allocated for each category, such as salaries, supplies, and utilities. This granularity provides clarity and accountability, as each line item can be monitored and justified based on organizational needs.

By focusing specifically on expense categories, line-item budgeting facilitates easier tracking of spending and supports thorough financial reporting. Managers can analyze where funds are spent and identify areas that may need adjustments. This method also aids in ensuring that expenditures adhere to the established budget, making it a practical tool for financial management.