Capital budgeting differs from cash budgeting in that

Question

Quizplus · Accepted Answer

Capital budgeting focuses on long-term investments in fixed assets or projects that are expected to generate returns over a period of five, ten, or even twenty years. In contrast, cash budgeting is a short-term financial plan that forecasts cash inflows and outflows for a specific period, usually one year or less. Thus, the main difference between the two is the time horizon of their focus. Choices B and C are incorrect because both cash budgeting and capital budgeting are concerned with both the balance sheet and the income statement, and capital budgeting does include cash outflows for capital assets.

Capital Budgeting Differs from Cash Budgeting in That