Which of the following statements regarding the capital expenditures budget is correct?
A) Installment payments related to the purchase of current assets are included in the capital expenditures budget.
B) Capital expenditures are purchases of long-term assets, such as office supplies.
C) The decision to purchase long-term assets is part of a strategic plan.
D) Capital expenditures are inexpensive assets.

Question

Quizplus · Accepted Answer

The decision to purchase long-term assets is part of a strategic plan, and is therefore a planned and deliberate decision that involves long-term planning and consideration. Option A is incorrect because installment payments related to the purchase of current assets are included in the operating budgets. Option B is incorrect because capital expenditures involve the purchase of long-term assets that provide benefits to the company over multiple years, unlike office supplies. Option D is incorrect because capital expenditures are typically expensive assets that require significant financial resources to acquire.

Which of the Following Statements Regarding the Capital Expenditures Budget