AZ-900 Describe cloud concepts Practice Question
A company is moving from an on-premises data center to the cloud. Previously, they paid a large upfront sum for hardware and then annual maintenance fees. Now they pay a monthly subscription based on actual usage of compute and storage. This shift represents moving from which type of expenditure to which?
⚠ Common exam trap
A common mix-up: candidates confuse the direction of the expenditure shift, mistakenly thinking that moving to the cloud increases upfront costs (OpEx to CapEx), when in reality it reduces them by converting capital expenses into operational expenses.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
From CapEx to OpEx
The scenario describes a shift from paying a large upfront sum for hardware (a capital expenditure, or CapEx) to a monthly subscription based on actual usage (an operational expenditure, or OpEx). In cloud computing, CapEx involves significant upfront costs for physical infrastructure, while OpEx involves ongoing, pay-as-you-go costs for services like compute and storage. This transition is a fundamental benefit of cloud adoption, allowing organizations to avoid large initial investments and instead pay for what they consume.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
From OpEx to CapEx
Why it's wrong here
OpEx to CapEx would mean shifting from paying for usage to making large upfront purchases of owned assets, which is the reverse of the described move. In the cloud, compute and storage services are typically treated as operating expenses since there is no asset ownership. Choosing this option would incorrectly suggest that the cloud requires capital investments in physical infrastructure, which contradicts the pay-as-you-go nature of cloud computing.
When this WOULD be correct
This option would be correct if the scenario described a company moving from a monthly subscription (OpEx) to purchasing its own hardware with a large upfront payment (CapEx).
- ✓
From CapEx to OpEx
Why this is correct
Adopting the cloud replaces the need to purchase physical servers, storage, and networking equipment with a pay-as-you-go consumption model. This transitions the company from capital expenditure (CapEx) — where costs are incurred as upfront asset purchases and then depreciated over time — to operational expenditure (OpEx), where the company pays for only the resources it actually uses, often on a monthly subscription or per-use basis.
- ✗
From variable to fixed costs
Why it's wrong here
The scenario actually describes the opposite of a move to fixed costs: on-premises data centers require a large, fixed outlay for hardware, warranties, and capacity, while cloud resources are variable and scale with actual usage. Thus, moving to the cloud typically converts a mostly fixed cost structure into a variable one, not from variable to fixed. Because the cloud model charges based on consumption, the company is gaining flexibility rather than locking in future fixed costs.
When this WOULD be correct
A company previously paid a fixed monthly fee for a dedicated server (fixed cost) and now pays per transaction (variable cost). The question asks: 'Moving from which type of cost to which?' Then 'From fixed to variable costs' would be correct.
- ✗
From direct to indirect costs
Why it's wrong here
Direct vs. indirect costs is a cost-accounting distinction that classifies expenses as attributable directly to a specific product, service, or department versus shared overhead. This classification is unrelated to the payment structure described here; the movement from on-premises to cloud is defined by whether an investment is capitalized upfront or expensed as it is incurred. Therefore, while both are financial concepts, 'direct vs. indirect' does not capture the shift the company is experiencing.
When this WOULD be correct
A company allocates cloud costs to specific projects (direct costs) versus shared overhead like security tools (indirect costs). The question would ask about cost allocation methods, not the shift from capital to operational expenditure.
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.
✓From CapEx to OpExCorrect answer▾
Why this is correct
Adopting the cloud replaces the need to purchase physical servers, storage, and networking equipment with a pay-as-you-go consumption model. This transitions the company from capital expenditure (CapEx) — where costs are incurred as upfront asset purchases and then depreciated over time — to operational expenditure (OpEx), where the company pays for only the resources it actually uses, often on a monthly subscription or per-use basis.
✗From OpEx to CapExWrong answer — click to see why▾
Why this is wrong here
The question describes moving from upfront hardware purchases (CapEx) to a usage-based subscription (OpEx). Option A reverses this, incorrectly stating a shift from OpEx to CapEx.
★ When this WOULD be the correct answer
This option would be correct if the scenario described a company moving from a monthly subscription (OpEx) to purchasing its own hardware with a large upfront payment (CapEx).
Why candidates choose this
Candidates may confuse the definitions of CapEx and OpEx, or misread the direction of the shift described in the question.
✗From variable to fixed costsWrong answer — click to see why▾
Why this is wrong here
The question describes a shift from upfront hardware purchases (capital expenditure) to usage-based subscription (operational expenditure). Moving from variable to fixed costs is the opposite direction; here, costs become variable, not fixed.
★ When this WOULD be the correct answer
A company previously paid a fixed monthly fee for a dedicated server (fixed cost) and now pays per transaction (variable cost). The question asks: 'Moving from which type of cost to which?' Then 'From fixed to variable costs' would be correct.
Why candidates choose this
Candidates may confuse 'variable vs fixed' with 'operational vs capital' because both involve changes in cost structure, but the question's context of upfront vs usage-based spending clearly points to CapEx vs OpEx.
✗From direct to indirect costsWrong answer — click to see why▾
Why this is wrong here
The question describes a shift from upfront hardware purchases (CapEx) to usage-based subscriptions (OpEx). Direct vs. indirect costs refer to cost attribution to specific products or departments, not the nature of expenditure over time.
★ When this WOULD be the correct answer
A company allocates cloud costs to specific projects (direct costs) versus shared overhead like security tools (indirect costs). The question would ask about cost allocation methods, not the shift from capital to operational expenditure.
Why candidates choose this
Candidates may confuse 'direct' with upfront costs and 'indirect' with ongoing costs, or they might think of cloud as an indirect cost because it's often shared across departments.
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?”
Go deeper
Related to this question
Learn chapter
What is Cloud Computing?
Key term
CapEx
CapEx (Capital Expenditure) is the money a company spends upfront to buy, build, or improve physical assets like servers, buildings, or equipment, which are then owned and depreciated over time.
Key term
OpEx
Operational Expenditure (OpEx) is the ongoing cost for running a business, like paying for cloud services monthly instead of buying hardware upfront.
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This AZ-900 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the AZ-900 exam.