Question 1mediummultiple choice
Full question →mediummultiple choiceObjective-mapped
A company's CFO is evaluating the financial impact of moving the company's on-premises data center to Azure. The on-premises data center requires significant upfront investment for servers, storage, and networking equipment, which is depreciated over several years. In contrast, Azure offers a pay-as-you-go pricing model where the company pays only for the resources it consumes, with no upfront costs. The CFO wants to understand how this shift changes the company's financial reporting. Which statement accurately describes the financial difference between on-premises and cloud spending?
Answer choices
Why each option matters
Good practice is not just finding the correct option. The wrong answers often show the exact trap the exam wants you to fall into.
A
Distractor review
On-premises is an operational expenditure (OpEx), while Azure is a capital expenditure (CapEx).
This statement is reversed. On-premises requires significant upfront capital investment, making it CapEx, not OpEx. Azure's pay-as-you-go model is OpEx because it is a recurring operational cost based on consumption.
B
Best answer
On-premises is a capital expenditure (CapEx), while Azure is an operational expenditure (OpEx).
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.
C
Distractor review
Both on-premises and Azure are classified as capital expenditures (CapEx).
This is incorrect because Azure's pay-as-you-go model lacks the upfront investment and asset depreciation characteristic of CapEx. Azure spending is an operational cost.
D
Distractor review
Both on-premises and Azure are classified as operational expenditures (OpEx).
This is incorrect. On-premises infrastructure purchases are not operational costs; they are capital investments that provide long-term value and are depreciated. Only Azure's consumption-based model is OpEx.
Common exam trap
Common exam trap: answer the scenario, not the keyword
Many certification questions include familiar terms but test a specific constraint. Read the exact wording before choosing an answer that is generally true but wrong for this case.
Technical deep dive
How to think about this question
This question should be treated as a scenario, not a definition check. Identify the problem, the constraint and the best action. Then compare each option against those facts.
KKey Concepts to Remember
- Read the scenario before looking for a memorised answer.
- Find the constraint that changes the correct option.
- Eliminate answers that are true in general but not in this case.
- Use explanations to understand the rule behind the answer.
TExam Day Tips
- Underline the problem statement mentally.
- Watch for words such as best, first, most likely and least administrative effort.
- Review why wrong options are wrong, not only why the correct option is correct.
Related practice questions
Related AZ-900 practice-question pages
Use these pages to review the topic behind this question. This is how one missed question becomes focused revision.
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More questions from this exam
Keep practising from the same exam bank, or move into a focused topic page if this question exposed a weak area.
Question 1
A developer is building a serverless application that requires integration with an on-premises SQL Server database for real-time data processing. The on-premises network is connected to Azure via a site-to-site VPN. Which Azure service would allow the function to securely access the on-premises database without exposing it to the public internet?
Question 2
A solutions architect is designing a storage solution for a large media company. The company needs to store video files that are accessed infrequently but must be retained for several years for compliance. Which two Azure storage options meet these requirements? (Select two.)
Question 3
A company deploys a multi-tier application using Azure virtual machines. The web tier VMs must be evenly distributed across two distinct data centers within an Azure region to avoid a single point of failure from an infrastructure outage. Which Azure construct should they use to meet this requirement?
Question 4
A company wants to enforce a set of security policies across all their Azure subscriptions. They have created several individual policy definitions. Which Azure construct should they use to group these policies together and assign them as a single package?
Question 5
A company deploys a line-of-business application on an Azure virtual machine. The IT team wants to ensure the application remains secure. According to the shared responsibility model, which of the following security tasks is the sole responsibility of the customer (the company)?
Question 6
A company develops a web API that runs on Azure App Service. The development team wants to deploy a new version of the API to a staging environment, run integration tests against it, and then gradually shift production traffic to the new version. If any issues are detected, they want to immediately roll back to the previous version without redeploying. Which Azure App Service feature should the team use to meet these requirements?
FAQ
Questions learners often ask
What does this AZ-900 question test?
Read the scenario before looking for a memorised answer.
What is the correct answer to this question?
The correct answer is: On-premises is a capital expenditure (CapEx), while Azure is an operational expenditure (OpEx). — On-premises hardware purchases are typically classified as capital expenditures (CapEx) because they are large upfront costs that provide long-term value and are depreciated over time. Azure's pay-as-you-go model is an operational expenditure (OpEx) because it is an ongoing cost for consumed services, with no upfront investment. This shift from CapEx to OpEx is a key financial benefit of cloud computing, allowing companies to better align costs with usage and improve cash flow.
What should I do if I get this AZ-900 question wrong?
Then try more questions from the same exam bank and focus on understanding why the wrong options are tempting.
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