Q14RQ - Horngren'S Financial And Managerial Accounting

Question

What is the capital expenditures budget?

Step-by-Step Solution

Answer

The capital expenditure budget estimates the amount for the purchase of property, buildings, machinery, and equipment. 

Step 1: Meaning of Capital Expenditure Budget

The capital expenditure budget is prepared by a business entity that estimates the amount needed to be invested in purchasing long-term or fixed assets.

 

Step2:Detailed explanation

Capital expenditure is the expenses incurred related to the purchase of long-term assets. These are generally expensive, so a strategic plan is needed while deciding on purchasing these long-term assets. It will facilitate the entity to spend wisely.