FISCAL BUDGETING VERSUS CAPITAL BUDGETING
Fiscal budgeting greatly influences the economy while Capital budgeting assesses a firm´s use of assets over the long term. Fiscal budgeting involves macroeconomic variables concerned with government spending, Aggregate demand given the current economic activity;distribution of income; and pattern of resource allocation within the government sector and relative to the private sector.
Capital budgeting regards incremental cash flows according to specific investments or projects. Some accountants use return on investment (ROI), however; economists consider this improper because it poorly captures information on the time value of money across a horizon stretching beyone one accounting cycle.
A capital budget tracks and projects Capital Expenses or Expenditures. These are incurred by a business for fixed assets, like buildings and equipment. These are not used for ordinary day-to-day operating expenses of a business, like rent, utilities, and insurance. They are also costs incurred for assets and usefulness intended to last beyond a year and are depreciated for tax purposes.