Answer: Acquisition costs are an expense on the capital budget.
Explanation: The correct statement is: Acquisition costs are an expense on the capital budget.
A capital budget is a plan that outlines a company's expenditures and investments for acquiring long-term assets, such as property, equipment, and other capital assets. Acquisition costs are expenses incurred in the process of acquiring these assets, such as purchase price, transportation, installation, and other related costs. As such, they are considered part of the capital budget.
The statement "The capital budget is driven by forecasted sales income" is incorrect. The capital budget is not necessarily driven by sales income. It is driven by the company's long-term investment plans and objectives.
The statement "Expenses in the capital budget do not affect the operating budget" is also incorrect. Capital expenditures affect both the capital budget and the operating budget. Capital expenditures reduce the company's available cash and increase its long-term debt, which can have an impact on its operating budget.
The statement "Interest charges are a capital expense" is incorrect. Interest charges are considered operating expenses, not capital expenses, as they are incurred in the day-to-day operations of the business.