What is included in capital budgets?

Capital budgets typically include items expected to last one year or more. This can encompass major purchases such as buildings, vehicles, and significant pieces of equipment that represent a long-term investment for an organization. The focus is on acquiring or improving assets that will serve the organization over an extended period, making option B aligned with standard practices in budgeting.

The selection of three years as mentioned in option B is somewhat more specific and could be part of particular budgeting practices but generally, the key aspect of a capital budget is covering capital expenditures for items that extend beyond a single fiscal year. Therefore, while the timeframe can differ slightly across organizations or contexts, the main understanding of capital budgets revolves around long-lasting assets, which is well captured by the concept of items expected to last one year or longer.

Current operational expenses, represented in option C, are typically included in operational budgets rather than capital budgets, as they deal with everyday costs necessary to run the organization rather than long-term investments. Option D is also misleading because capital budgets are not limited solely to new equipment purchases; they can cover a range of capital projects and improvements as well. Thus, capital budgets are broader than just new equipment, aiming to reflect all significant expenditures that will benefit the organization over a considerable duration.