CMOM Management Institute Practice Test

Fixed expenses are defined by their nature of remaining constant regardless of the volume of services provided. This means that even if a company sees fluctuations in its activity level—whether an increase or decrease in the services rendered—the amount attributable to fixed expenses does not change. These expenses include costs such as rent, salaries of permanent staff, and insurance, which must be paid regardless of the organization's output.

In contrast, variable expenses would change with the level of services offered, making option A incorrect. Uncollectable debts, represented in option C, pertain to accounts receivable that cannot be collected but do not define the character of fixed expenses. Lastly, option D refers to expenses that vary depending on specific services, which describes variable costs rather than fixed ones. Therefore, the definition provided by option B accurately encapsulates the essence of fixed expenses in financial management.