MTLE Practice Exam 2025 – Complete Test Prep Guide

The correct terminology for money spent on a nonexpendable item with a life expectancy greater than one fiscal year is "capital expenditure." This term refers to funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, technology, and equipment, which are expected to provide benefits over a long period, typically more than one year. Capital expenditures are important for long-term investment strategies, as they contribute to the operational efficiency and productivity of the organization.

In contrast, the other terms represent different financial concepts. An expenditure refers to any outflow of money for goods or services, which could include both short-term and long-term purchases. Annual cost typically relates to the average cost incurred or budgeting for a particular item each year, rather than indicating a long-term investment. A depreciable item refers specifically to assets that decrease in value over time and can be spread out as an expense over their useful life but does not capture the broader aspect of long-term investment that capital expenditure embodies.