MANAGEMENT

Detailed explanation-1: -Capital Budgeting is the process of making financial decisions regarding investing in long-term assets for a business. It involves conducting a thorough evaluation of risks and returns before approving or rejecting a prospective investment decision. This process is also known as investment appraisal.

Detailed explanation-2: -Capital budgeting involves identifying the cash in ows and cash out ows rather than accounting revenues and expenses owing from the investment. For example, non-expense items like debt principal payments are included in capital budgeting because they are cash ow transactions.

Detailed explanation-3: -The investment of funds into capital or productive assets, which is what capital budgeting entails, meets all three of the above criteria and therefore is considered a long-term decision.

Detailed explanation-4: -Capital Budgeting is a part of: Investment Decision.

Detailed explanation-5: -Capital budgeting is the process that a business uses to determine which proposed fixed asset purchases it should accept, and which should be declined. This process is used to create a quantitative view of each proposed fixed asset investment, thereby giving a rational basis for making a judgment.