Explain the difference between operating expenditures and capital expenditures in an airport budget.

Explain the difference between operating expenditures and capital expenditures in an airport budget.

• A. Operating expenditures include long-term assets; capital expenditures cover maintenance.
• B. Operating expenditures are grant funds; capital expenditures are user fees.
• C. Operating expenditures cover day-to-day costs; capital expenditures fund long-term assets and improvements and are capitalized.
• D. Operating expenditures are only salaries; capital expenditures are utilities.

Answer: (C)

Operating expenditures are the day-to-day costs required to run airport operations, such as salaries, utilities, and routine maintenance. Capital expenditures are investments in long-term assets and major improvements that provide value over many years, and they are capitalized on the balance sheet and depreciated over their useful life. This distinction matters because it separates ongoing expenses from investments that enhance capacity or efficiency for the future. Other options mix up the concepts: maintenance belongs in operating costs, not capital; long-term assets are what drive capital expenditures, not operating; and grant funds or user fees describe funding sources rather than the nature of the spending itself; utilities are typically operating costs, not capital expenditures.

Operating expenditures are the day-to-day costs required to run airport operations, such as salaries, utilities, and routine maintenance. Capital expenditures are investments in long-term assets and major improvements that provide value over many years, and they are capitalized on the balance sheet and depreciated over their useful life. This distinction matters because it separates ongoing expenses from investments that enhance capacity or efficiency for the future.

Other options mix up the concepts: maintenance belongs in operating costs, not capital; long-term assets are what drive capital expenditures, not operating; and grant funds or user fees describe funding sources rather than the nature of the spending itself; utilities are typically operating costs, not capital expenditures.