What is an example of a non-recurring expense?

• A. Monthly rent payments
• B. Legal settlements
• C. Employee salaries
• D. Routine maintenance costs

Answer: (B)

A non-recurring expense is an expenditure that is not expected to happen regularly or frequently. An example of this is legal settlements, which can arise from lawsuits or disputes and typically occur infrequently, depending on the circumstances of each case. Once the legal matter is resolved, that particular expense does not repeat unless a new and unrelated situation arises.

In contrast, other options involve recurring costs that businesses routinely incur. Monthly rent payments, employee salaries, and routine maintenance costs are all examples of expenses that occur regularly and are predictable, making them part of the ongoing operational budget. Legal settlements stand out as they usually depend on specific incidents and do not follow a set schedule, thereby qualifying them as non-recurring.