Which one of the following would not be a part of the capital budgeting process?

Question

Which one of the following would not be a part of the capital budgeting process?

Select one:

a. Estimating the cash inflows/outflows of a potential new asset

b. Determining how much debt should be used to purchase a new asset

c. Conducting market research to determine demand for a modified product

d. Projecting multiple years of sales growth to determine capacity (asset) constraints

One of the most important goals of budgeting is:

Select one:

a. Determining the cash needs of the business months in advance

b. Determining how much of the direct labor force should be cut each year

c. Determining maximum spending amounts for individual departments, regardless of changes

d. Appeasing the President of the company by over-estimating sales

Which one of the following would not be a part of the capital budgeting process?

Select one:

a. Estimating the cash inflows/outflows of a potential new asset

b. Determining how much debt should be used to purchase a new asset

c. Conducting market research to determine demand for a modified product

d. Projecting multiple years of sales growth to determine capacity (asset) constraints

A master budget consists of

Select one:

a. an interrelated long-term plan and operating budgets

b. financial budgets and a long-term plan

c. interrelated capital budgets and operating budgets

d. all the accounting journals and ledgers used by a company

Explanation / Answer

Ans 1 b. Determining how much debt should be used to purchase a new asset In capital budgeting process we evaluate will the project will be profitable or not so we see the inflows and outflow of the project ans 2 a. Determining the cash needs of the business months in advance In budgeting the goal is set to see how much needs to be spend. ans 3 same as 1 as same question ans 3 Master budget consisits of c. interrelated capital budgets and operating budgets A master budget has operating budgets such as sales budget, purchase budget, expense budget etc it also has a budget for capital expenditure.

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