Which of the following is a reason capital budget requests should be reviewed and approved by executive management?
A)These investments are made for the short-term on a non-routine basis.
B)These investments will likely have a significant impact on the company's future financial health.
C)They must be aborted if future losses are occurring.
D)They often require significant maintenance costs each year.

Question

Quizplus · Accepted Answer

Capital budget requests involve significant financial investment and have a long-term impact on a company's financial health. Therefore, it is crucial that executive management reviews and approves them to ensure that they align with the company's objectives and do not adversely affect its financial stability. Option A is incorrect because capital budget requests are typically made for the long-term, and not short-term. Option C is incorrect because investments cannot be aborted just because there are future losses; instead, the company needs to consider various risk factors before making investments. Option D is incorrect because while capital investments may require maintenance costs, that alone is not a reason for executive management to approve their request.

Which of the Following Is a Reason Capital Budget Requests