Question : What is the difference between a capital budget and an operating budget?
Option 1: A capital budget deals with long-term investments, while an operating budget deals with day-to-day expenses
Option 2: A capital budget deals with day-to-day expenses, while an operating budget deals with long-term investments
Option 3: A capital budget is a surplus budget, while an operating budget is a deficit budget
Option 4: A capital budget is a deficit budget, while an operating budget is a surplus budget
Correct Answer: A capital budget deals with long-term investments, while an operating budget deals with day-to-day expenses
Solution : The correct answer is (a) A capital budget deals with long-term investments, while an operating budget deals with day-to-day expenses
The difference between a capital budget and an operating budget lies in the types of expenses they encompass and the timeframes they cover.
A capital budget primarily focuses on long-term investments in assets such as infrastructure, buildings, equipment, and other capital expenditures. It involves planning and allocating funds for projects that are expected to provide benefits over an extended period, often several years or more. The capital budget typically includes items such as construction, renovation, major equipment purchases, and investments in long-term assets. The purpose of the capital budget is to enhance or expand the productive capacity of an organization or government.
On the other hand, an operating budget deals with day-to-day expenses required to run the regular operations of an organization or government. It covers ongoing costs such as salaries, wages, utilities, maintenance, supplies, and other recurring expenses necessary to sustain the organization's activities. The operating budget is typically prepared and reviewed on an annual basis and focuses on short-term financial activities.
So, the primary distinction is that a capital budget pertains to long-term investments, while an operating budget pertains to day-to-day expenses.
Question : What is the difference between a deficit budget and a surplus budget?
Option 1: A deficit budget spends more than it earns, while a surplus budget earns more than it spends
Option 2: A deficit budget earns more than it spends, while a surplus budget spends more than it earns
Option 3: A deficit budget earns as much as it spends, while a surplus budget earns more than it spends
Option 4: A deficit budget spends as much as it earns, while a surplus budget spends more than it earns
Question : What is the difference between a budget deficit and a national debt?
Option 1: A budget deficit is the difference between government spending and revenue in a given year, while the national debt is the accumulation of all previous deficits
Option 2: A national debt is the difference between government spending and revenue in a given year, while a budget deficit is the accumulation of all previous deficits
Option 3: A budget deficit is a surplus in government spending, while a national debt is a deficit in government spending
Option 4: A national debt is a surplus in government spending, while a budget deficit is a deficit in government spending
Question : Which type of budget is primarily concerned with planning and allocating funds for long-term investments, such as infrastructure development or major equipment purchases?
Option 1: Operating budget
Option 2: Capital budget
Option 3: Cash budget
Option 4: Program budget
Question : What is the difference between a balanced budget and a deficit budget?
Option 1: A balanced budget spends as much as it earns, while a deficit budget spends more than it earns
Option 2: A balanced budget earns as much as it spends, while a deficit budget spends more than it earns
Option 3: A balanced budget spends more than it earns, while a deficit budget earns more than it spends
Option 4: A balanced budget earns more than it spends, while a deficit budget spends as much as it earns
Question : What is the difference between a balanced budget and a surplus budget?
Option 1: A balanced budget has equal spending and revenue, while a surplus budget has more revenue than spending
Option 2: A balanced budget has more spending than revenue, while a surplus budget has equal spending and revenue
Option 3: A balanced budget has more revenue than spending, while a surplus budget has equal spending and revenue
Option 4: A balanced budget has equal spending and revenue, while a surplus budget has more spending than revenue
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