Question : Which type of budget is primarily concerned with planning and allocating funds for long-term investments, such as infrastructure development or major equipment purchases?
Option 1: Operating budget
Option 2: Capital budget
Option 3: Cash budget
Option 4: Program budget
Correct Answer: Capital budget
Solution : The correct answer is (b) Capital budget.
A capital budget is primarily concerned with planning and allocating funds for long-term investments. It focuses on financing capital expenditures, such as infrastructure development, major equipment purchases, construction projects, and other investments that have a long-term impact on the economy or organization.
The capital budget is separate from the operating budget, which deals with day-to-day expenses and operational activities. While the operating budget covers recurring expenses and current operations, the capital budget specifically addresses long-term investments and projects.
A cash budget, on the other hand, focuses on tracking and managing cash inflows and outflows to ensure adequate liquidity and cash flow management.
A program budget is a budgeting approach that organizes expenses according to specific programs or activities rather than traditional departmental or functional categories. It is a way to allocate funds to various programs or initiatives based on their priorities and goals.
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