When Each New Budget Is Based on the Amounts Contained

question 185

Multiple Choice

When each new budget is based on the amounts contained in the budget from the preceding year, a company is using ____ budgeting.

• A) zero-base
• B) traditional
• C) Cash
• D) capital
• E) production

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Definitions:

Capital Market

Financial markets where long-term debt or equity-backed securities are bought and sold, aiding in the raising of capital for entities.

Stock Market

A collection of markets where stocks (pieces of ownership in businesses) are bought, sold, and issued.

Risk Premium

A risk premium is the extra return above the risk-free rate that investors require as compensation for the risk of holding a risky asset.

Future Payments

Payments that are scheduled to be made at a later date or period.