Which statement about periodic expenses is true?

• A. Costs which occur on an irregular basis, rather than monthly, such as quarterly insurance premiums or maintenance.
• B. Costs that occur monthly on a fixed date.
• C. Costs that are always the same each year.
• D. Costs that are always due at the end of a loan term.

Answer: (A)

Periodic expenses are costs that don’t occur every month; they show up at intervals like quarterly, semiannual, or even irregularly. The statement describing costs that occur on an irregular basis—such as quarterly insurance premiums or maintenance—best captures that idea. This matters for budgeting because you need to plan ahead for these less frequent payments, often by setting aside money over time rather than expecting a smooth monthly outflow. The other descriptions describe expenses that happen regularly on a fixed monthly schedule, or are fixed yearly costs, or relate to debt repayment timing, which aren’t the same concept as periodic expenses.