14.4 The Capital Budget and Projecting Cash Collections

Question 1

Which one of the following is the best characteristic concerning the capital budget? The capital budget is a(n)

A. Plan to ensure that there are sufficient funds available for the operating needs of the company.
B. Plan that assesses the long-term needs of the company for plant and equipment purchases.
C. Exercise that sets the long-range goals of the company including the consideration of external influences caused by others in the market.
D. Plan that results in the cash requirements during the operating cycle.

Answer 1

B. Plan that assesses the long-term needs of the company for plant and equipment purchases.

Question 2

The cash receipts budget includes

A. Loan proceeds
B. Extinguishment of debt
C. Operating supplies
D. Funded depreciation

Answer 2

A. Loan proceeds.