Capital Expenditure Budgets

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What is the primary purpose of capital expenditure budgets?

To analyze daily operational expenses
To plan, monitor, and control long-term financial issues (correct)
To manage employee salaries and benefits
To track short-term financial transactions

Which part of the Capital Expenditure Budget represents spending for new capital assets?

First part
Both first and second part
Second part (correct)
Neither first nor second part

What are the reasons for new asset spending in the context of Capital Expenditure Budgets?

Reducing operational expenses
Minimizing financial risk
Decreasing employee benefits
Expansion of capacity in a department or program (correct)

What is an important tool used in budget construction related to capital expenditure?

Net Cash Flow Reporting (B) Signup and view all the answers

Which method is NOT included in the Cash Flow Reporting Methods for budget construction related to capital expenditure?

Return on Investment method (C) Signup and view all the answers

What is the main focus of Capital Expenditure Budgets?

Planning for long-lasting assets like equipment and buildings (B) Signup and view all the answers

In the context of Capital Expenditure Budgets, what does the first part of the budget represent?

Spending for maintenance of existing assets (A) Signup and view all the answers

What is the purpose of Net Cash Flow Reporting in budget construction related to capital expenditure?

To track the movement of cash over a period of time (D) Signup and view all the answers

Which of the following is NOT a method included in Cash Flow Reporting Methods for budget construction related to capital expenditure?

Return on Investment method (C) Signup and view all the answers

What is the primary reason for new asset spending in the context of Capital Expenditure Budgets?

To expand capacity in a department or program (B) Signup and view all the answers

Explain the purpose of capital expenditure budgets and what types of assets are involved in capital expenditure.

The purpose of capital expenditure budgets is to plan, monitor, and control long-term financial issues related to acquiring long-lasting assets such as equipment, buildings, and land. Signup and view all the answers

What are the two parts that make up the Capital Expenditure Budget and what do they represent?

The two parts of the Capital Expenditure Budget are: 1) Spending for capital assets that have already been acquired and are in place, representing spending to protect existing assets. 2) Spending for new capital assets such as equipment, buildings, and land, representing spending to acquire new assets. Signup and view all the answers

Detail the reasons for new asset spending within the context of Capital Expenditure Budgets.

Reasons for new asset spending include expansion of capacity, creation of new facilities or programs, acquiring new equipment to improve productivity, and obtaining new equipment or space to comply with federal or state requirements. Signup and view all the answers

Explain the importance of Net Cash Flow Reporting in budget construction related to capital expenditure.

Net Cash Flow Reporting is important as it illustrates how the project's cash is expected to move over time, showing inflows and outflows. It must be reported cumulatively to demonstrate the overall net accumulated result. Signup and view all the answers

List the four methods included in Cash Flow Reporting Methods for budget construction related to capital expenditure.

The four methods included in Cash Flow Reporting Methods are: Payback method, Accounting rate of return, Net Present Value, and Internal Rate of Return. Signup and view all the answers

Capital Expenditure Budgets

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