In prospect budgeting, which statement correctly distinguishes OPEX from CAPEX?

• A. OPEX are investments in assets; CAPEX are ongoing costs.
• B. OPEX are ongoing costs like salaries and software subscriptions; CAPEX are investments in long-term assets like a new CRM system.
• C. OPEX are one-time purchases; CAPEX are monthly subscriptions.
• D. OPEX are revenues; CAPEX are marketing expenses.

Answer: (B)

Operating expenses are the ongoing costs needed to run the business, while capital expenditures are investments in long-term assets that provide value over multiple periods. In budgeting, OPEX covers items like salaries, utilities, and software subscriptions—expenses that hit the income statement in the period they occur. CAPEX covers purchases of long-term assets, such as a new CRM system, which are capitalized and depreciated over their useful life.

This distinction is why the statement describing OPEX as ongoing costs like salaries and software subscriptions and CAPEX as investments in long-term assets like a CRM system is correct. The other options mix up these categories or assign the wrong nature to types of spending (for example, suggesting OPEX are one-time purchases or revenues).