Capital budgeting involves planning and justifying how money is spent on short-term items like inventory, and payroll as well as on long-term projects such as new business ventures, equipment replacement, and expansion.

Question

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Capital budgeting specifically refers to the process of planning and justifying expenditures on long-term projects and investments, such as new ventures, equipment replacement, and expansion. It does not typically involve short-term spending decisions like inventory and payroll.

Capital Budgeting Involves Planning and Justifying How Money Is Spent