Capital Budgeting In The Private Sector

INTRODUCTION
Every business firm normally will like to know hoe it performed over a period of time, thus leading to the preparation of profit and loss statement.  They also ask about their position at a particular pointing time, which leads them to prepare balance sheet.
Finally, they will like to know where they are heading, which has led to the preparation of budgets.
Budget is term used locally by a layman.  Layman confuse budgeting with planning.  A budget is part of a plan.  A plan can be expressed in monetary and non-monetary term.  Any plan that is qualified in monetary term is a budget.  A budget, therefore can be socially defined as a statement of intention qualified in monetary term.
In budgeting there are types of budget prepared by firms.  Such budgets includes capital budgets, cash budget, sales budgets so on.
The process of preparing capital budget is called capital budgeting.  Capital budgets are long term budgets made for acquisition and expansion for fixed assets.  Many firms prepare capital budgets today.  It was originated in the United States of America (USA).  In America it was applied by firms before the Second World War.  After the Second World War, may firm saw the need to plan for capital expenditure, hence it is prevalence today.