Which statement about operating budgets is not true?

Which statement about operating budgets is not true?

• A. Operating budgets exclude direct charges to projects.
• B. Operating budgets include direct charges to projects.
• C. Operating budgets are separate from capital project budgets.
• D. Operating budgets cover administrative support costs.

Answer: (B)

Operating budgets cover the ongoing, day-to-day costs that keep the organization running, including overhead and administrative support, and they are kept separate from the capital budget that funds long-term asset investments. Direct charges to projects, on the other hand, are costs allocated directly to a specific project and belong on that project’s budget, not in the general operating budget. Therefore, saying that the operating budget includes direct charges to projects is not true. The other statements align with this structure: operating budgets are separate from capital budgets, and they do cover administrative support costs.

Operating budgets cover the ongoing, day-to-day costs that keep the organization running, including overhead and administrative support, and they are kept separate from the capital budget that funds long-term asset investments. Direct charges to projects, on the other hand, are costs allocated directly to a specific project and belong on that project’s budget, not in the general operating budget. Therefore, saying that the operating budget includes direct charges to projects is not true. The other statements align with this structure: operating budgets are separate from capital budgets, and they do cover administrative support costs.