Multiple Choice QuestionCapital budgeting is used to evaluate the purchase of:Multiple choice question.inventorya machineoffice suppliesa computer

Break Down the Problem

1. Identify the purpose of capital budgeting.
2. Evaluate each option in the context of capital budgeting principles.

Relevant Concepts

1. Capital budgeting refers to the process of planning and managing a firm's long-term investments. It is used to assess the profitability and risk of investment projects.
2. Capital budgeting typically applies to assets that will be used for an extended period, often requiring significant amounts of investment.

Analysis and Detail

1. Inventory: This is usually a short-term asset and does not typically require capital budgeting.
2. A machine: This is a long-term investment that generally will be used for multiple years, which makes it a good candidate for capital budgeting.
3. Office supplies: These are also a short-term expense and do not usually go through the capital budgeting process.
4. A computer: While computers have a longer lifespan than office supplies, they often do not exceed the spending threshold for capital expenditures.

Verify and Summarize

• Based on the principles of capital budgeting, the purchase of long-lasting, significant investment items is the focus. A machine stands out as the most relevant asset that typically requires capital budgeting analysis, given its long-term impact and investment nature.

Final Answer

A machine.