The capital budget is comprised of long-term planning or a major acquisitions component, and a short-term budgeting component.

• A. It is comprised of long-term planning, or a major acquisitions component, and a short-term budgeting component.
• B. It only covers annual operating expenses.
• C. It only covers staffing costs.
• D. It covers daily routine maintenance.

Answer: (A)

Capital budgeting focuses on long-horizon investments that will shape the organization for years to come, such as new facilities, major renovations, or expensive equipment and systems. It has two parts: a long-range capital plan that identifies needs, priorities, risks, and expected benefits, and a short-term capital expenditures budget that translates that plan into funding for the next year or two, outlining costs, financing, and timing. This structure links strategic asset decisions with practical implementation and cash flow planning. By contrast, day-to-day operating expenses—like staffing, routine maintenance, and utilities—are handled in the operating budget, not the capital budget.