What is a budget for major investment expenditures called?

Accounting Dec 17, 2020

Expert Solution

A budget for major investment expenditures is called a capital budget.

A capital budget identifies estimated income and expenses that could affect major decisions in a business over a long-term period.

Examples of decisions that involve capital budgeting are purchase of machinery, developing a new product, and selling a building. The company may look into the historical data of the company like in the yearly financial statement to make an estimated data. These data are used as the basis for making necessary decisions.

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