Which budget details the major equipment or building purchases the department plans to make?

• A. A zero-base
• B. A line-item
• C. An operating
• D. A capital

Answer: (D)

The main idea is how budgets are used for different kinds of spending. A capital budget is the plan that outlines major acquisitions of long-term assets, like equipment or building projects, and when they will happen and how they’ll be funded. It focuses on large, once-in-a-while purchases that provide value over many years and often involves financing or depreciation considerations. In contrast, a line-item budget breaks down ongoing expenses by category within the operating period, a zero-base budget requires building the budget from scratch each period and justifying every item, and an operating budget covers day-to-day revenues and expenses. So detailing the department’s plan for major equipment or building purchases fits with the capital budget.