Which budget type would fund anticipated major purchases such as new facilities or large equipment?

Which budget type would fund anticipated major purchases such as new facilities or large equipment?

• A. Bond budget
• B. Capital budget
• C. Cost recovery budget
• D. Personnel budget

Answer: (B)

Capital budgets are set up specifically for long-term investments in assets like new facilities and major equipment. These expenditures are typically large and span multiple years, so they’re planned separately from day-to-day operating costs. Using a capital budget ensures there’s a formal plan for acquiring or upgrading critical assets and often involves financing options such as reserves, debt, or bonds. The other budgets focus on different areas: personnel budgets cover salaries and benefits, cost-recovery budgets relate to fees and revenue from services, and while bonds can fund capital projects, they’re a financing method rather than the budget type itself. So for anticipated major purchases, the capital budget is the best fit.

Capital budgets are set up specifically for long-term investments in assets like new facilities and major equipment. These expenditures are typically large and span multiple years, so they’re planned separately from day-to-day operating costs. Using a capital budget ensures there’s a formal plan for acquiring or upgrading critical assets and often involves financing options such as reserves, debt, or bonds. The other budgets focus on different areas: personnel budgets cover salaries and benefits, cost-recovery budgets relate to fees and revenue from services, and while bonds can fund capital projects, they’re a financing method rather than the budget type itself. So for anticipated major purchases, the capital budget is the best fit.