Which of the following best describes capital expenditures?

Capital expenditures refer to the funds used by a business to acquire, upgrade, or maintain long-term assets that are expected to provide value over an extended period, typically more than one year. This can include the purchase of property, buildings, equipment, or technology. The critical aspect of capital expenditures is that they are investments aimed at enhancing the overall capacity or efficiency of the company, contributing to its operational effectiveness and revenue generation in the long run.

In contrast, short-term operational costs involve expenses that are related to the day-to-day functioning of the business, which are typically recorded as operating expenses rather than capital expenditures. Direct costs associated with production usually refer to variable costs like materials and labor directly tied to manufacturing goods, while costs related to employee training are generally classified as operational costs rather than investments in long-term assets. Thus, investments in long-term assets provide a solid alignment with the definition of capital expenditures, making this the correct answer.