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

Remember to discuss the differences in the length of use, the types of assets, and how they are treated from an accounting perspective. Demonstration of knowledge of these areas will give the interviewer confidence that you understand this budgetary aspect. Also, include a brief example of each type of asset to further demonstrate your understanding.

"Capital budgets typically represent the money necessary for the long-term resources a company needs to do business, and operating budgets represent the money needed to keep things moving daily. Capital assets are usually planned for in advance and are depreciated over time from an accounting perspective. Operating budgets are usually steady and continually accounted for. The assets are not owned or appropriate to be depreciated.

An example of capital expense would be the purchase of a series of new servers to store data. An example of an operating expense would be the cost of software licenses that a company pays for."