Question

how does a community budget for capital expenditures?

Answer 1

Q. How does a community budget for capital expenditures..?

Before entering into the topic let's brief about capital expenditure budgeting:

In simply capital expenditure is defines as a formal plans that defines the amount and timing of the purchase of a fixed by any organization.It is also a part of the annual budget used by the firm in-order to organize the activities that are coming on near future or the upcoming year.

Community budget for capital expenditure in the following ways:

Implementing a Budget Limit

Input of departments

Budget expenditure separation

Capital expenditure returns should be measured

• Implementing a budget limit:

A thorough assessment should be implemented for needs of the capital expenditure. From the early stage itself through the better way's for capital expenditure budget planning determine the maximum spend on capital. Then the company can implement a success plan based on this spending limits.

• Input of departments:

The day to day operations are comes under the responsibility of the departmental head. So more than any others the departmental head can identify the budgeting for capital expenditure. And also after getting his suggestion it should be determined by the owners and upper management.

• Budget expenditure separation:

the capital expenditures and other expenditures are separately assessed by most of the companies. They are always trying to maintain a separate budget from the operational expenses.

• Capital expenditure returns should be measured.

For assessing the to measure the capital expenditure return there are lot of ways. Some of them are calculation of hudle rate, ROI (Return On Investment) ration etc.. and also ensure the payback period for the community budget capital expenditure.