Personal Finance - Lesson 2 Assessment

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Western Governors University *

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363

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Finance

Date

Jan 9, 2024

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5

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12/31/23, 4:27 AM Personal Finance | WGU-CGP-OEX https://apps.cgp-oex.wgu.edu/wgulearning/course/course-v1:WGUx+OEX0177+v01/block-v1:WGUx+OEX0177+v01+type@sequential+block@7a58e60407ed4c9f9a580742f5ebd38d/block-v1:WGUx+OEX0177+v01… 2/7 Lesson 2 Assessment 6.857142857142857/8.0 points (ungraded) How well do you know the information presented in Lesson 2? Answer these questions to find out. If you do well, you may be ready to move on to the next lesson. If you are unable to answer the questions, you may want to go back to the lesson and engage with the content. Question 1 Nora’s car broke down, and the unexpected out-of-pocket cost to fix it was $1,000. Nora’s expenses now exceed her income for this month. What will Nora’s cash-flow statement for this month show? Correct: Because her income is less than her expenses, her cash-flow statement would show a deficit. Question 2 Lulu wants to create a budget, but she does not know where to start. What should a financial planner advise Lulu? Correct: A financial advisor would advise their client to record all expenses for 30 days to see exactly where the money is currently being spent. Question 3 How should credit card charges be handled within a personal budget? A variable loss A surplus A net gain A deficit Record all expenses for 30 days to see how income is currently being spent Use only a debit card for 30 days to easily track where money is being spent Create budget categories and estimate monthly expenses and income Document a reason for each expense, whether paid by check, cash, or card Credit card charges should be recorded at the time of the transaction. Record credit card transactions once the monthly statement is received. Credit card charges are not recorded in a personal budget but instead in their own worksheet. List credit card transactions in a separate section of the personal budget for tracking purposes. Personal Finance
12/31/23, 4:27 AM Personal Finance | WGU-CGP-OEX https://apps.cgp-oex.wgu.edu/wgulearning/course/course-v1:WGUx+OEX0177+v01/block-v1:WGUx+OEX0177+v01+type@sequential+block@7a58e60407ed4c9f9a580742f5ebd38d/block-v1:WGUx+OEX0177+v01… 3/7 Correct: Financial advisors advise clients to record credit card charges at the time of the transaction to have an accurate picture of monthly spending. Question 4 Diego wants to know if he has enough income and savings to cover all of his debt obligations. How should Diego answer this question? Correct: Asset-to-debt ratio indicates if there are enough cash assets to meet the debt obligations. A high ratio is desired. Question 5 Why do financial experts suggest that couples close redundant bank accounts? Correct: The more open bank accounts partners have the more fees they are likely to pay. Financial experts suggest keeping only essential accounts. Question 6 Nora wants to take her dream vacation to Ghana. She needs to save $5,000 for the trip, and she wants to travel in two years. Which approach to savings should Nora consider to achieve her financial goal? Correct: Intermediate-term savings goals can typically be reached in two to five years, for example putting money away for an overseas vacation. Calculate the debt payments-to-disposable-income ratio Calculate the asset-to-debt ratio Calculate the debt-to-income ratio Calculate the liquidity ratio To improve their credit scores To help pay off debt faster To save money on banking and account fees To facilitate the budgeting process Compound Short-term Long-term Intermediate-term Personal Finance
12/31/23, 4:27 AM Personal Finance | WGU-CGP-OEX https://apps.cgp-oex.wgu.edu/wgulearning/course/course-v1:WGUx+OEX0177+v01/block-v1:WGUx+OEX0177+v01+type@sequential+block@7a58e60407ed4c9f9a580742f5ebd38d/block-v1:WGUx+OEX0177+v01… 4/7 Question 7 William creates a budget that estimates $1,750 for his summer vacation. He further breaks down the costs this way: Hotel – $900 Public Transportation – $50 Restaurants – $500 Museum Pass – $100 Other Entertainment – $200 What is this list an example of? Incorrect: A budget exception occurs when a budget estimate differs from the amount of the actual expense. Question 8 What is the term used to describe the amount of money that one brings home each pay period? Correct: Disposable income, that is, take-home pay, is the amount of money paid each pay period, after taxes and other expenses have been withheld. Question 9 What is used to estimate monthly income and expenses as part of the budgeting process? A subordinate budget A budget variance A budget exception A net surplus Interest income Discretionary income Disposable income Gross income Intake-output calendar Discretionary expenses fund Cash-flow calendar Revolving savings fund Personal Finance
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12/31/23, 4:27 AM Personal Finance | WGU-CGP-OEX https://apps.cgp-oex.wgu.edu/wgulearning/course/course-v1:WGUx+OEX0177+v01/block-v1:WGUx+OEX0177+v01+type@sequential+block@7a58e60407ed4c9f9a580742f5ebd38d/block-v1:WGUx+OEX0177+v01… 5/7 Correct: A cash-flow calendar includes estimates for monthly income and expenses. Question 10 William just created a budget and is concerned that there is so little money left over at the end of the month. He wants to cut his spending to increase the money left over. What would a financial planner suggest to reduce spending? (Choose 2 answers.) Incorrect: "Use a debit card for all shopping, so that all transactions are in one place—a checking account." is incorrect. Financial experts would actually advise using cash for purchases, to keep from spending money that one does not have. "Install a programmable thermostat, so that the air conditioner and furnace are only working when someone is actually home." is correct. A programmable thermostat can save up to 15% off cooling and heating bills. Question 11 Charlotte wants to avoid overspending in any category of her budget. What ensures proper oversight over personal spending to keep each category in check? Correct: Budget controls, such as tracking what you spend and budgeting for shopping trips, are techniques of planned spending that help you maintain control over personal spending so that those planned amounts are not exceeded. Question 12 Maya is creating a personal budget. Which two resources should she have ready before beginning? (Choose 2 answers.) Increase income tax withholding so that tax liability each year is reduced, even though his take-home pay will decrease Be efficient, and shop at a shopping mall rather than many individual stores that are more spread out Keep the TV and cable box plugged into a power strip, and only turn the power strip on in the evenings when it is time to watch television. Use a debit card for all shopping, so that all transactions are in one place—a checking account. Install a programmable thermostat, so that the air conditioner and furnace are only working when someone is actually home. Discretionary reporting Long-term controls Budget controls Cash-flow calendars Financial statements List of assets Fixed expenses List of beneficiaries Personal Finance
12/31/23, 4:27 AM Personal Finance | WGU-CGP-OEX https://apps.cgp-oex.wgu.edu/wgulearning/course/course-v1:WGUx+OEX0177+v01/block-v1:WGUx+OEX0177+v01+type@sequential+block@7a58e60407ed4c9f9a580742f5ebd38d/block-v1:WGUx+OEX0177+v01… 6/7 Correct: "Financial statements" is correct. Maya should start by gathering recent financial statements, such as banking and investment statements. "Fixed expenses" is correct. In order to create an accurate budget, Maya will need to know the exact cost of her fixed expenses. Question 13 What should the first step be when creating a personal budget? Correct: A personal budget starts with a list of total monthly income and expenses. Question 14 Lucas wants to work on improving his spending habits to be financially successful. Which plan does Lucas need to follow to achieve his financial goals? Correct: A budget is a paper or electronic document used to record both planned and actual income and expenses over a period of time. Submit Writing out financial goals Listing retirement and investment account balances Listing total monthly income and expenses Making a list of assets and liabilities Budget Investment plan Net worth statement Estate plan Personal Finance