Which type of budget accounts for both operating and capital expenses?

The appropriations budget is designed to account for both operating and capital expenses, making it the correct choice in this context. This type of budget provides a comprehensive overview of all funds allocated for various expenditures within a municipality for a specific period, typically a fiscal year. By including both operating expenses—which cover day-to-day expenditures like salaries, utilities, and supplies—and capital expenses, which involve long-term investments such as property, infrastructure, and significant equipment purchases, the appropriations budget supports effective financial planning and management within local government entities.

In contrast, the operating budget focuses solely on the short-term expenditures necessary for the day-to-day functioning of the municipality. The linear budget and projected budget are not standard terminology in municipal finance as they do not encapsulate both aspects of budgeting in the same manner as the appropriations budget. Thus, the appropriations budget serves as a vital tool for financial accountability and planning by encompassing all necessary aspects of municipal finances.