Question

What is a major difference between an operating budget and a capital budget?

A.(Correct on grad point)An operating budget is for day-to-day expenses; a capital budget is for investment spending.
B.In an operating budget, legislation is needed; in a capital budget, no legislation is needed.
C.An operating budget is raised by bonds; a capital budget is raised by taxes.
D.An operating budget consists of small amounts of money; a capital budget consists of large amounts of money.

Answer 1

The major difference between an operating budget and a capital budget is:

A. An operating budget is for day-to-day expenses; a capital budget is for investment spending.

Step-by-step explanation:

An operating budget focuses on the day-to-day expenses and revenue of an organization over a specific period. It typically covers items such as salaries, wages, utilities, and supplies, in order to maintain the regular activities of the organization.

In contrast, a capital budget is used for long-term investments in assets such as buildings, equipment, technology, and other infrastructure. The spending in this budget is usually larger than the spending allocated in an operating budget since it is intended to improve or expand the organization's capabilities, rather than simply maintain them.

Legislation or bonds may be needed to authorize or finance some of the projects included in a capital budget, but this is not a defining characteristic of the budget itself.