The evaluation of prospective investment alternatives and the commitment of funds to preferred projects is referred to as:
A) Capital budgeting
B) Cash management
C) Flow budgeting
D) Decentralized management

Question

Quizplus · Accepted Answer

Capital budgeting involves evaluating potential investment options and allocating funds to the most promising projects. This process is vital for business decision-making, as it helps ensure that company resources are being used effectively to generate returns and achieve strategic goals. Cash management refers to the management of a company's cash flows and liquidity, while flow budgeting is a budgeting process that focuses on tracking cash inflows and outflows. Decentralized management is a management structure where decision making is distributed across various levels of an organization. While all of these may be important aspects of business management, only capital budgeting relates directly to the evaluation and selection of investment opportunities.

The Evaluation of Prospective Investment Alternatives and the Commitment of Funds