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Capital Budgeting

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Capital Budgeting

This topic introduces students to concepts and practices in capital budgeting. It covers the definition and scope of capital in budgeting, and how capital budgets differ from operating budgets. It looks at capital assets, their valuation, depreciation, and replacement costing. It examines information technology assets to derive lessons in planning complex systems. This topic looks at how major projects are funded and how cost-benefit analysis can evaluate options. It explores the role of business planning and what makes a good business plan (Queen's MPA 827).

Topic Learning Outcome: Students will be able to clearly describe what a capital budget is, explain how it differs from an operating budget, and will understand the conceptual reasons why distinctions are made between the two categories of expenditures.

Core Concepts associated with this Topic: Assets; Bond; Capital Assets; Capital Budget; Capital Equipment; Capital Goods; Capital Project; Depreciation; Depreciation Expense; Physical Capital; Straight-Line Depreciation; Useful Life of an Asset.

Recommended Readings

Carleton University: PADM-5416 Budget Management for the Public Sector

Graham, Andrew. 2007. Canadian Public-Sector Financial Management. Chapter 7.

 Sample Assessment Questions:

1.) What is a capital budget? Briefly explain why separate capital budgets and operating budgets are created and maintained.

2.) What is depreciation? Why is this an important accounting concept?

Page created by Sean Goertzen and Ben Eisen on 20 May 2015.


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