A project team is preparing its budget. Which of the following is a non-recurring cost?

Question

BlackTom AI · Accepted Answer

Non-recurring costs are one-time or infrequent expenditures that are not expected to repeat as part of normal ongoing operations. They are typically capital expenses (CapEx) for a specific project phase, purchase, or implementation activity rather than operating expenses (OpEx) that recur regularly.

1) Relevant knowledge points and concepts
- Recurring cost: a cost that repeats on a regular schedule (monthly, quarterly, annually) and is part of ongoing operations (e.g., hosting fees, license renewals, scheduled maintenance).
- Non-recurring cost: a one-time or infrequent cost associated with a specific event or phase (e.g., purchase of equipment for a particular project, setup fees, initial installation).
- CapEx vs OpEx: non-recurring costs often fall under capital expenditure; recurring costs are usually operating expenditure.

2) Step-by-step reasoning
- Examine each answer option and classify it according to the definitions above.
- Option A: "Monthly cloud hosting fees" — the term monthly indicates repetition; this is a recurring operating cost.
- Option B: "Quarterly software licence renewals" — renewals every quarter clearly repeat on a schedule; this is recurring.
- Option C: "Purchase of specialised testing equipment needed only during system integration" — purchase is a one-time acquisition tied to a specific project phase; it won’t occur repeatedly during normal operations, so it is non-recurring.
- Option D: "Routine system maintenance every two months" — the phrase every two months indicates a repeating schedule; this is recurring.

3) Calculations
- No numerical calculations are required; classification is qualitative.

4) Why the correct answer is correct
- The specialised testing equipment is bought once for the system integration phase; once that phase is complete, the cost does not recur as a periodic expense. That matches the definition of a non-recurring (one-time) cost.

5) Why the other options are incorrect
- Monthly cloud hosting fees: continuous monthly payments = recurring.
- Quarterly licence renewals: scheduled, repeated payments = recurring.
- Routine maintenance every two months: periodic scheduled work = recurring.

6) Conclusion
- Therefore the correct choice is "Purchase of specialised testing equipment needed only during system integration," which matches the provided answer.

A project team is preparing its budget. Which of the following is a non-recurring cost?Single choice

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