Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which budget focuses on the short-term operational financial commitments of a business?

1. Capital expenditure budget

2. Operational budget

3. Cash flow budget

4. Sales projection budget

The correct answer is: Operational budget

The operational budget is essential for managing the day-to-day financial activities of a business. It outlines the expected revenues and expenses for a specific period, typically a fiscal year or quarter. This budget is directly related to the operational aspects of a business and includes costs associated with production, sales, marketing, and administration. It helps businesses plan for their operational needs, ensuring they have sufficient resources to cover regular expenses while also providing a framework for evaluating performance. In contrast, the capital expenditure budget typically focuses on long-term investments and expenditures on assets that will benefit the business over many years. The cash flow budget is more concerned with tracking the inflow and outflow of cash, ensuring that there are adequate funds available to meet immediate operational requirements. Lastly, the sales projection budget is primarily dedicated to forecasting revenues based on expected sales volumes, without detailing the specific expenses associated with those sales. Therefore, the operational budget is specifically designed to address short-term financial commitments, making it the correct answer.