Capital budgeting differs from cash budgeting in that
A)Cash budgeting focuses on short-term results while capital budgeting focuses on five, ten, or even twenty years in the future.
B)Cash budgeting focuses on the balance sheet while capital budgeting focuses on the income statement.
C)A cash budget contains only expected cash outflows for capital assets while capital budgeting includes both cash inflows and outflows.
D)Cash budgeting is based on cash-basis accounting while capital budgeting is based on accrual-basis.

Question

Quizplus · Accepted Answer

Cash budgeting is focused on short-term cash inflows and outflows, typically covering a period of one year or less. On the other hand, capital budgeting involves the evaluation of long-term investment decisions that will impact the company for several years, often involving the acquisition of long-term assets such as property, equipment, or facilities. Therefore, capital budgeting focuses on the long-term financial impact of these decisions, rather than short-term cash flow management.

Capital Budgeting Differs from Cash Budgeting in That