Question

Clem paid 45 to rent a safety deposit box. What type of expense is the rent for a safety deposit box?

A) Variable expense
B) Fixed expense
C) Operating expense
D) Capital expense

Answer 1

The rent for a safety deposit box is classified as a fixed expense because it is a regular and fixed amount that needs to be paid regardless of the level of production or activity.

Correct option is B Fixed expense

Step-by-step explanation:

The rent for a safety deposit box would be classified as a Fixed expense. Fixed expenses are costs that do not change regardless of the level of production or activity. They are expenses that are fixed and must be paid regularly, such as rent, salaries, or insurance. Since the rent for a safety deposit box is a fixed amount that needs to be paid regularly, it falls under the category of fixed expenses.

Fixed expenses encompass various essential costs in both personal and business budgets, including rent, salaries, and insurance premiums. Identifying the rent for a safety deposit box as a fixed expense underscores its stable and recurring nature, distinguishing it from variable expenses that may fluctuate based on activity levels. Recognizing and categorizing expenses accurately is fundamental for budgeting and financial planning, providing a clear understanding of ongoing financial commitments.