Multiple Choice
Financial assistance intended to aid students in reaching their educational goals is called _____.
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1. Introduction to Accounting
Types of Accounting
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following statements is correct regarding your monthly rent payment?
A
It is a capital expense because it is used to acquire assets.
B
It is a discretionary expense because it is optional.
C
It is a variable expense because it changes each month.
D
It is a fixed expense because it remains the same each month.
Verified step by step guidance1
Understand the definitions of the terms provided in the options: Capital expense, discretionary expense, variable expense, and fixed expense.
A capital expense refers to costs incurred to acquire or improve long-term assets, such as equipment or property. Monthly rent does not fall under this category because it is not used to acquire an asset.
A discretionary expense is an optional cost that can be avoided or reduced, such as entertainment or luxury items. Monthly rent is not optional, so it is not a discretionary expense.
A variable expense changes in amount from month to month, such as utility bills or groceries. Monthly rent typically remains constant, so it is not a variable expense.
A fixed expense is a cost that remains the same over a period of time, such as monthly rent. Since rent payments are consistent and predictable, they are classified as fixed expenses.
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