AZ-900 Describe cloud concepts Practice Question

Answer analysis

Option-by-option breakdown

For each option: why learners choose it and why it is or isn't the right answer here.

• ✗

  On-premises is an operational expenditure (OpEx), while Azure is a capital expenditure (CapEx).

  Why it's wrong here

  This option reverses the standard cost classifications. On-premises deployments require significant upfront purchases for servers, storage, and networking equipment, which are recorded as capital expenditures on the balance sheet and depreciated over their useful life. Azure services, by contrast, are billed monthly or per-use, representing a consumable operating expense without any capitalized asset ownership. Because Azure does not deliver a depreciable physical asset, it cannot be classified as CapEx.

  When this WOULD be correct

  If the question described a scenario where on-premises costs were leased or paid as an ongoing service (e.g., renting equipment) and Azure required a large upfront commitment (e.g., reserved instances with full prepayment), then on-premises could be OpEx and Azure CapEx.

• ✓

  On-premises is a capital expenditure (CapEx), while Azure is an operational expenditure (OpEx).

  Why this is correct

  Correct. On-premises data center purchases (servers, storage, etc.) are CapEx because they involve large upfront investments that are depreciated. Azure's consumption-based pricing is OpEx because it is a variable cost incurred only when resources are used.

• ✗

  Both on-premises and Azure are classified as capital expenditures (CapEx).

  Why it's wrong here

  This option incorrectly treats Azure consumption as a capital investment. While on-premises hardware purchases are CapEx because they create a long-term depreciable asset, Azure's pay-as-you-go model charges only for resources consumed, making it an ongoing operational cost. Prepaying for Azure services—such as a one-year reservation for VMs—does not change the fundamental nature of the transaction; the payment buys access to a service over time, not an owned asset, so it is still reported as OpEx under standard accounting guidance.

  When this WOULD be correct

  If the question described a scenario where a company uses Azure Reserved Instances with a large upfront payment for a multi-year commitment, that could be considered a capital expenditure, making both on-premises and Azure CapEx.

• ✗

  Both on-premises and Azure are classified as operational expenditures (OpEx).

  Why it's wrong here

  This option fails to recognize that on-premises infrastructure purchases meet the accounting definition of an asset. Buying a physical server or storage array gives the company ownership of a resource expected to provide future benefit, so the cost is capitalized and depreciated rather than expensed immediately. Only the ongoing operational costs of running that on-premises environment—electricity, cooling, maintenance, and staffing—are OpEx. Azure’s consumption-based fees are entirely OpEx, but that does not make the hardware acquisition an operational expense.

  When this WOULD be correct

  If the question described a scenario where the company uses Azure Reserved Instances with a large upfront payment (CapEx) and also has an on-premises data center with a leasing agreement that treats payments as operational expenses (OpEx), then both could be classified as OpEx.

Option-by-option analysis

Why each answer is right or wrong

Understanding why wrong answers are wrong — and when they would be correct — is what separates a 750 score from a 900. The AZ-900 exam frequently reuses these exact scenarios with slightly different constraints.

Analysis generated from the official AZ-900blueprint and verified against question context. The “when correct” sections are what AI assistants cite when candidates ask “what’s the difference between these options?”

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