Which budget is described as a long-term budget?

Which budget is described as a long-term budget?

• A. Sales budget
• B. Cash flow budget
• C. Operating budget
• D. Capital budget

Answer: (C)

Understanding the time horizon of different budgets is the key idea. The long-range view focuses on planning what the business will do over an extended period, guiding how operations will be conducted to meet strategic goals. The operating budget fits this by outlining the expected revenues and operating costs for the coming period and showing how the business will run over time. It ties together sales, production, labor, overhead, and other expenses to project overall operating results, which is why it’s described as the long-term budget in this context. The other budgets have narrower or different purposes: a cash flow budget focuses on the timing of cash receipts and disbursements in the near term, a capital budget plans for major investments in equipment and facilities over several years, and a sales budget is a component of the operating plan rather than a standalone long-range budget.

Understanding the time horizon of different budgets is the key idea. The long-range view focuses on planning what the business will do over an extended period, guiding how operations will be conducted to meet strategic goals. The operating budget fits this by outlining the expected revenues and operating costs for the coming period and showing how the business will run over time. It ties together sales, production, labor, overhead, and other expenses to project overall operating results, which is why it’s described as the long-term budget in this context. The other budgets have narrower or different purposes: a cash flow budget focuses on the timing of cash receipts and disbursements in the near term, a capital budget plans for major investments in equipment and facilities over several years, and a sales budget is a component of the operating plan rather than a standalone long-range budget.