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A fixed expense is an expense that:A.is unpredictable.B.you can reduce by buying less.C.you can predict.D.is necessary for repairs.SUBMITarrow_backPREVIOUS

Question

A fixed expense is an expense that:

  • A. is unpredictable.
  • B. you can reduce by buying less.
  • C. you can predict.
  • D. is necessary for repairs.
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Solution

Answer

A fixed expense is an expense that C. you can predict.

Explanation: Fixed expenses are costs that do not fluctuate with the level of activity or usage. They remain constant over a period, allowing individuals or businesses to predict their future expenses accurately. Examples include rent, salaries, and loan payments, which must be paid regularly regardless of income levels or business performance.

In contrast, an expense that is unpredictable would be categorized as a variable expense, which can change, such as utility bills or grocery costs. While it's possible to reduce certain fixed expenses by negotiating terms or finding cheaper alternatives, this aspect does not define fixed expenses. Lastly, fixed expenses are not necessarily linked to repairs; rather, they are regular, ongoing costs that are essential for maintaining agreements or services. Thus, the answer is clearly option C, as predictability is the key characteristic of fixed expenses.

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