The capital expenditure budget:

Question

Quizplus · Accepted Answer

The capital expenditure budget identifies a firm's planned investments in major fixed assets and long-term projects. It is a forecast of the firm's spending on assets like land, buildings, equipment, and technology, which have long-term benefits and are not purchased or sold in the normal course of business. The budget helps to ensure that the firm has enough funds available to make these investments and to assess the impact of these investments on the firm's future growth and profitability. A is incorrect because the quarterly estimates of product sales are typically part of the operating budget. C is incorrect because short-term cash flow fluctuations are typically analyzed using the cash budget, while D is incorrect because the budgets for direct labor, direct materials, and overhead costs are part of the manufacturing budget or production budget.

The Capital Expenditure Budget