If a State Constructs Its Budget by Making Small Adjustments

question 47

Multiple Choice

If a state constructs its budget by making small adjustments to the previous year's allocations while avoiding a comprehensive review of requested funds, it is engaging in which type of budgeting?

• A)Line item budgeting
• B)Performance budgeting
• C)Incremental budgeting
• D)Capital budgeting

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Definitions:

Borrowed Money

Funds that are obtained through loans or credits, which must be repaid with interest.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, including issuing debt, issuing equity, and paying dividends.

Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a business, indicating the organization's liquidity.

Bond Principal

Bond principal, or face value, is the amount that the issuer agrees to pay the bondholder at maturity, excluding any interest payments.