In a personal budget, under which category is entertainment typically classified?

• A. Income
• B. Discretionary expenses
• C. Savings
• D. Fixed expenses

Answer: (B)

Verified step by step guidance

1. Understand the concept of discretionary expenses: These are non-essential expenses that individuals choose to spend money on, such as entertainment, dining out, or hobbies.
2. Review the categories provided in the problem: Income, Discretionary expenses, Savings, and Fixed expenses.
3. Analyze the nature of entertainment expenses: Entertainment is typically a choice-based expense and not a necessity, which aligns with the definition of discretionary expenses.
4. Compare entertainment expenses with other categories: Entertainment does not generate income, is not a fixed recurring expense, and does not fall under savings, making discretionary expenses the most appropriate classification.
5. Conclude that entertainment is classified under discretionary expenses because it represents optional spending based on personal preferences.