Which statement correctly describes CapEx versus OpEx in IT budgeting?

Which statement correctly describes CapEx versus OpEx in IT budgeting?

• A. CapEx funds long-term assets; OpEx funds ongoing operating costs.
• B. CapEx funds ongoing operating costs; OpEx funds long-term assets.
• C. CapEx funds cloud subscriptions.
• D. OpEx funds capital expenditures.

Answer: (A)

CapEx is for acquiring or upgrading long-term assets with multi-year usefulness, which are capitalized and depreciated over time. OpEx covers the ongoing costs needed to run IT services in the present period, such as cloud subscriptions, maintenance, utilities, and staff expenses. So the statement that CapEx funds long-term assets and OpEx funds ongoing operating costs matches how budgets distinguish between major investments versus day-to-day operations. The other options misalign cloud subscriptions (typically OpEx, not CapEx) or mix up the nature of OpEx and CapEx.

CapEx is for acquiring or upgrading long-term assets with multi-year usefulness, which are capitalized and depreciated over time. OpEx covers the ongoing costs needed to run IT services in the present period, such as cloud subscriptions, maintenance, utilities, and staff expenses. So the statement that CapEx funds long-term assets and OpEx funds ongoing operating costs matches how budgets distinguish between major investments versus day-to-day operations. The other options misalign cloud subscriptions (typically OpEx, not CapEx) or mix up the nature of OpEx and CapEx.