| Meaning of Capital Budgeting |
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The word investment refers to the expenditure which is required to be
made in connection with the acquisition and the development of
long-term facilities including fixed assets. It refers to process by
which management selects those investment proposals which are
worthwhile for investing available funds. For this purpose,
management is to decide whether or not to acquire, or add to or
replace fixed assets in the light of overall objectives of the
firm.
What is capital expenditure, is a very difficult question to answer. The terms capital expenditure are associated with accounting. Normally capital expenditure is one which is intended to benefit future period i.e., in more than one year as opposed to revenue expenditure, the benefit of which is supposed to be exhausted within the year concerned. |
Friday, April 5, 2013
capital budgeting meaning
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