The Practice of Preparing Budgets for Each of Several Future

question 47

Multiple Choice

The practice of preparing budgets for each of several future periods and revising those budgets as each period is completed, adding a new budget each period so that the budgets always cover the same number of future periods, is called:

• A) Participatory budgeting.
• B) Capital budgeting.
• C) Balanced budgeting.
• D) Continuous budgeting.
• E) Primary budgeting.

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Definitions:

Present Value

The equivalent value today of cash flows or a sum of money anticipated in the future, using a predetermined return rate.

Annuity

A financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees.

Interest Rate

Interest rate is the percentage charged by a lender to a borrower for the use of assets, adjusting for the cost of credit or the return on investment.

Lump Sum

A single payment made at a particular time, as opposed to several smaller installments.