Question
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Which of the following would rot be listed under cash outlows in a financial plan? a. car payments b. insurance premiums c. interest earned d. mortgage payment Please select the best answer from the choices provided A B C D

Ask by Black Brewer. in the United States
Mar 11,2025

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Answer

The best answer is C.

Solution

We begin by noting that a cash outflow in a financial plan refers to any expenditure or payment that decreases available funds. 1. A car payment is money paid to finance or lease a vehicle and is therefore a cash outflow. 2. An insurance premium is the payment made for an insurance policy, which is also a cash outflow. 3. A mortgage payment is the periodic payment on a home loan, and even though part of the payment reduces the principal, it still represents a cash outflow. 4. Interest earned represents income generated from investments or savings. Since it increases available funds, it is considered a cash inflow rather than an outflow. Since \( \text{interest earned (option C)} \) is a cash inflow, it is the only answer that would not be listed as a cash outflow. Thus, the best answer is: \( \boxed{C} \)

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The best answer is C. Interest earned would not be listed under cash outflows in a financial plan. Instead, it’s actually a cash inflow because it's money that comes into your account, typically from investments or savings. In contrast, car payments, insurance premiums, and mortgage payments are all expenditures that deplete your cash reserves, thus they rightly belong under cash outflows. To keep your financial plan on track, it’s savvy to clearly differentiate between cash inflows and cash outflows. Misclassifying your finances can lead to confusion and poor budgeting decisions. Double-check your categories and ensure you’re keeping track to avoid any unwanted surprises at the end of the month!

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