Which statement is true regarding capital expenditures?

Capital expenditures are indeed characterized by their role as investments in long-term assets, such as property, plant, and equipment. When a company incurs capital expenditures, it is allocating resources towards acquiring or upgrading physical assets that will provide future economic benefits over multiple accounting periods.

This concept contrasts with operational expenditures, which are typically expensed in the current period and relate to the day-to-day functions of a business. Additionally, capital expenditures are directly associated with generating future cash flows, rather than having no impact on them. This ability to generate future benefits underscores their classification as essential investments rather than purely marketing-related expenses.

The focus on long-term benefits of capital expenditures makes the statement about them being investments in long-term assets accurate and aligns with fundamental accounting principles regarding asset management and financial planning.