Which statement best describes fixed expenses?

• A. They can change from month to month (food, entertainment).
• B. They stay the same each period (rent, loan payments).
• C. They are always optional.
• D. They are only paid at the end of the year.

Answer: (B)

Fixed expenses are regular, predictable payments that don’t change from one period to the next because they’re often contractually set or required. Rent and loan payments are classic examples. This constant nature distinguishes them from variable expenses, which fluctuate with activity like how much you eat out or buy groceries. It’s not that fixed expenses are optional, and they aren’t tied to only the end of the year—many are paid monthly or on another regular schedule. So the statement that fixed expenses stay the same each period best describes them.