What is the meaning of discretionary expenses?

A discretionary expense is a cost that a business or household can survive without, if necessary. Discretionary expenses are often defined as nonessential spending.

What are examples of discretionary costs?

Discretionary costs (avoidable costs) are costs or capital expenditures that can be curtailed or even eliminated in the short term without having an immediate impact on the short-term profitability of a business. Examples of discretionary costs include advertising, maintenance, training, R&D, etc.

What is not a discretionary expense?

Expenses are split into two categories – discretionary and non-discretionary. In simpler terms, non-discretionary expenses are those that are necessary to be incurred, also called as needs such as utilities, groceries, mortgage, taxes, etc.

What are examples of non discretionary expenses?

Nondiscretionary expenses are things you must pay for or buy, including the following:
  • Food.
  • Rent or mortgage.
  • Car payments.
  • Utilities.

What are the 4 types of expenses?

Terms in this set (4)
  • Variable expenses. Expenses that vary from month to month (electriticy, gas, groceries, clothing).
  • Fixed expenses. Expenses that remain the same from month to month(rent, cable bill, car payment)
  • Intermittent expenses. …
  • Discretionary (non-essential) expenses.

What are 4 examples of discretionary spending?

Some examples of areas funded by discretionary spending are national defense, foreign aid, education and transportation.

Which of the following is most commonly a discretionary expense?

A discretionary expense is voluntary spending. You want to buy something, but it isn’t mandatory. Entertainment and recreational purchases fall into this category. On the other hand, bills such as rent, mortgage payments and utilities are nondiscretionary expenses.

Which are examples of discretionary spending quizlet?

Discretionary spending is what the President and Congress must decide to spend for the next fiscal year through annual appropriations bills. Examples include money for such programs as the FBI, the Coast Guard, housing, education, space exploration, highway construction, defense, and foreign aid.

What is discretionary vs non discretionary?

Discretionary versus Non-Discretionary Investment Accounts

Simply put, a discretionary account is one in which a broker makes trades, buying or selling securities, in an investor’s account without the investor’s approval. A non-discretionary account is one in which the investor decides on what trades to make.

What are discretionary fixed costs?

What are discretionary fixed costs? Discretionary fixed costs are a type of fixed cost that a company can eliminate from its budget without a major impact on its normal operations. To understand how these expenses work, it can be helpful to identify the difference between fixed and variable costs.

What is the difference between discretionary spending and mandatory spending?

In most cases, but not all, mandatory spending is ongoing; it occurs each year absent a change in an underlying law that provides the funding. Discretionary spending, on the other hand, will not occur unless Congress acts each year to provide the funding through an appropriations bill.

Which of the following is discretionary spending?

In addition to defense spending, discretionary spending includes the compensation for almost all federal employees, research grants, and many government services. Discretionary spending accounts for approximately 30 percent of the federal budget.

Which of the following is one of the two main categories of discretionary spending?

Totaling about one-third of the federal budget, discretionary spending programs can be further divided into two categories: defense and non-defense.

What is one example of mandatory spending an example of discretionary spending?

For example, the administrative expenses associated with running the Social Security Administration generally are funded with discretionary spending, but the benefit checks sent to retirees and disability recipients enrolled in Social Security programs are classified as mandatory spending.

What is another name for mandatory spending?

Also known as entitlement spending, in US fiscal policy, mandatory spending is government spending on certain programs that are required by law.

Is clothing a discretionary expense?

Some of the expenditures are necessary expenses – food, water, clothing, and shelter. However, most of the expenditures in modern society are discretionary expenses. Most individuals receive some sort of income. The amount of income remaining after paying off all necessary expenses is known as discretionary income.

What can discretionary funds be used to pay for?

Nondefense discretionary spending funds an array of federal activities in areas such as education, transportation, income security, veterans’ health care, and homeland security. Over the past four decades, spending in that category has generally ranged from about 3 percent to 4 percent of GDP.

Which of the following items is not discretionary in nature?

Answer and Explanation: Correct Answer: Option (c) Union wages is the correct answer because these expenses have to be paid, Othe all mentioned expenses are discretionary in nature.

What is an example of discretionary?

The definition of discretionary is something that you use as desired or needed. When you have petty cash available to you to use, the money you spend is an example of discretionary spending. Available at one’s discretion; able to be used as one chooses; left to or regulated by one’s own discretion or judgment.

What’s the 50 30 20 budget rule?

Key Takeaways. The rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-do. The remaining half should be split up between 20% savings and debt repayment and 30% to everything else that you might want.