Question

Which one of the following statements is true regarding operational budgeting or capital budgeting?

A. Operational budgeting is the planning for the acquisition of property, plant, and equipment.
B. Capital budgeting is the planning for the acquisition of property, plant, and equipment.
C. Operational budgeting is the planning for how to market products.
D. Capital budgeting is the planning for how to market products.
E. Operational budgeting is the planning for how to obtain the financing for both short-term and long-term projects.
F. Capital budgeting is the planning for how to obtain the financing for both short-term and long-term projects.

Answer 1

The correct answer is B: Capital budgeting is the planning for the acquisition of property, plant, and equipment.

Step-by-step explanation:

Business organizations use capital budgeting to make a decision on which fixed asset should be purchase and which should be declined. It is a planning process that assists business in the acquisition of property, plant, and equipment (fixed assets); it also determines which fixed asset would be detrimental to profit.