WISE Economics and Personal Finance Practice Test 2026 – Comprehensive Exam Prep

"Expenditure" in financial terms refers to the outflow of funds used to purchase goods or services. When individuals or organizations spend money, whether for necessities like housing and food or for discretionary items such as entertainment and luxury goods, these transactions are classified as expenditures. This concept is crucial for understanding cash flow, budgeting, and financial management, as it directly impacts an individual's or entity's overall financial position.

The other options do not accurately describe "expenditure." A savings deposit reflects money set aside rather than spent, income received indicates incoming funds rather than the money outgoing, and a method of budgeting expenses relates more to how one organizes and the strategies used to manage spending rather than defining what expenditure actually is. Understanding expenditure is essential for making informed financial decisions and maintaining healthy financial habits.