all the content for business Flashcards
function of money
be unit of account
legal tender
means of exchange
store of value
influences on the role of money
culture
life event
external influences
interest rates
personal attitudes
advantage and disadvantage of using cash?
- advantage of using cash is cash widely accepted everywhere
- another advantage of using cash is cash has no extra fees you have to pay for.
Disadvantages
disadvantage of using cash it is very easy to lose the money
another disadvantage of using cash is it very inconvient
why plan expenditure?
control cost
avoid getting into debt
set financial goals and goals
maintain good credit score
generate income and sales
advantage and disadvantage of using of credit
3.However, if not managed well, credit can lead to high-interest debt and overspending. Missing payments can hurt your credit score, and some credit cards come with extra fees. While credit is helpful, it should be used carefully to avoid financial problems.
1. advantage of using credit it makes easier to shop by allowing purchases without cash and helps build a good credit history for future loans.
2. another advantage of using credit is the rewards that you can get from like cash back and discounts which can provide security against fraud.
3. one disadvantage of using credit is the high interest rate which lead go into debt and overspend which could your credit score
4. one disadvantage of using credit is the extra fees you have pay which makes you pay extra money on the cards.
advantage and disadvantage of using of debit
1.You can only use the money you already have in your bank account, which makes it easier to manage your budget and avoid debt.
2.Debit cards are widely accepted in shops and online, and they also let you withdraw cash from ATMs quickly.
- Since you’re not borrowing money, you won’t have to pay interest or face late payment charges like with credit cards.
4.Using a debit card doesn’t help build your credit history, which is important for future loans or renting a home.
5.someone steals your card and uses it, the money is taken directly from your bank account, and it may be harder to get it back compared to a credit card.
Most debit cards don’t offer cashback, loyalty points, or other benefits that credit cards often provide.
advantage and disadvantage of using of cheque
- One advantage of using cheques because they are a safe way to make large payments without carrying cash. They also provide a record of transactions, which helps with tracking expenses.
2.another advantage of using Cheques because they can be written to individuals or businesses, making them convenient for different payments.
3.Cheques take time to process, so payments may be delayed. They can also bounce if there are not enough funds in the account, leading to extra charges.
4.Additionally, fewer places accept cheques now due to the rise of digital payments. While cheques are useful, they are becoming less common in today’s fast-paced world.
advantage and disadvantage of using of contactless
1.one advantage of Using contactless payment is quick and convenient, allowing purchases with just a tap.
2.one advantage of using contactless payments is It saves time, reduces the need for cash, and improves hygiene by avoiding physical contact. Many cards and devices also have security features to protect against fraud.
disadvantage of using contactless payment is accidental payments, spending too easily, and limits on transaction amounts.
3. another disadvantage of using contactless payments it can get lost or stolen, unauthorized transactions may occur before it is blocked. While contactless payments are useful, they should be used carefully to stay secure.
advantage and disadvantage of using of mobile banking
Mobile banking has both advantages and disadvantages. It is convenient, allowing users to manage their money anytime and anywhere. It saves time by enabling quick transfers, bill payments, and balance checks without visiting a bank. Mobile banking also provides security features like biometric login and alerts for suspicious activity. However, there are some risks, such as fraud, hacking, and technical issues that may prevent access to accounts. Poor internet connection can also be a problem. While mobile banking is fast and efficient, users must be cautious and ensure their accounts are secure
advantage and disadvantage of using of standard current account
- one advantage of using standard account is It allows easy access to money through debit cards, online banking, and ATMs, making everyday transactions simple.
- other advantage of using standard account is features like direct debits, standing orders, and overdraft facilities for extra flexibility.
3.one disadvantage of using a standard account is the fees for overdrafts or certain transactions. If not managed well, overdrafts can lead to debt.
- other disadvantage of using standard account is the limits on free transactions or minimum balance requirements. While a current account is useful for managing money, it is important to use it wisely to avoid extra costs.
advantage and disadvantage of using of standard basic account
1.one advantage of using standard basic account is all feature such as allowing you to make deposit and withdraw cash, make payments, and receive wages easily.
- other advantage of using standard basic account It provides a debit card for secure transactions and online banking for convenience.
- one disadvantage of using standard basic account is the accounts may have limited features, such as no overdraft facility or interest on savings. Some banks may also charge fees for certain services.
advantage and disadvantage of using of standard premium account
one advantage of using premium account is the extra features like higher interest rates, cashback on spending, or travel insurance. Customers may also get better customer service and exclusive deals.
one disadvantage of using Premium accounts usually have higher monthly fees, which may not be worth it if the added benefits are not used.
other disadvantage of using premium account is some of the features may only be useful to certain people, making it not ideal for everyone. So, while it offers extra perks, the cost may not always justify the benefits for every user.
advantage and disadvantage of using of student current account
One key advantage is that these accounts often come with no monthly fees, which helps students manage their finances without additional costs. Many student accounts also offer benefits like an interest-free overdraft, which provides flexibility if students need extra money temporarily. Additionally, student accounts often include perks like discounts and special offers tailored to students.
one key disadvantage of a student account is they might need to convert their accounts to a standard current account, which could involve changes in fees or overdraft terms. Also, while the interest-free overdraft can be useful, it can lead to bad financial habits if not managed carefully. Furthermore, student accounts often have limited features compared to regular current accounts, and students may need to pay attention to any specific terms and conditions to avoid extra charges.
advantage and disadvantage of using of overdraft as form of borrowing
Using an overdraft as a form of borrowing has both advantages and disadvantages. One advantage is that it provides quick access to extra funds in case of emergencies or unexpected expenses. It is also flexible, as you only pay interest on the amount you use.
However, overdrafts can be expensive if not repaid quickly, as they often come with high interest rates and fees. Overusing an overdraft can lead to a cycle of debt, and excessive reliance on it may affect your credit score. Therefore, while overdrafts can be helpful, they should be used carefully and responsibly.
advantage and disadvantage of using of mortgages as form of borrowing
Mortgages are a popular way to finance the purchase of a home, and they offer several advantages. One of the main benefits is that they allow you to buy a property without needing to pay the full price upfront, making homeownership accessible. Additionally, mortgage interest rates are often lower compared to other forms of borrowing, and in many cases, the property value may increase over time, building equity.
However, there are also disadvantages. Mortgages usually require long-term commitment, often spanning 15 to 30 years, meaning you’re locked into regular payments for a significant period. If you fail to make payments, you risk losing your home through foreclosure. Furthermore, the total cost of the mortgage, including interest, can be much higher than the original property price, especially with adjustable-rate mortgages that can fluctuate over time.
advantage and disadvantage of using of hire purchase as form of borrowing
Hire purchase can be a useful way to acquire goods, especially for people who can’t afford to pay the full price upfront. One advantage is that it allows you to spread the cost of an item over a set period, making it more affordable. Also, once you complete all the payments, the item becomes fully yours.
However, a disadvantage is that hire purchase agreements often come with higher overall costs due to interest charges, which can make the item more expensive than paying in full upfront. Additionally, failing to keep up with payments can lead to the loss of the item and affect your credit score.
advantage and disadvantage of using of personal loans as form of borrowing
Personal loans can be a convenient way to borrow money as they often come with fixed interest rates and predictable repayment schedules. One advantage is that they can be used for various purposes, like consolidating debt or covering unexpected expenses.
However, the downside is that personal loans can have high-interest rates, especially if you have a poor credit history. If not managed properly, they can lead to financial strain due to the fixed monthly payments. Additionally, some lenders may charge fees for loan origination or early repayment.
advantage and disadvantage of using of pay day loans as form of borrowing
Payday loans can provide quick access to cash in emergencies, making them an appealing option for some. One advantage is that they are typically easy to qualify for, with little documentation required, and you can often get the money on the same day. This can be useful when you need funds urgently, like for unexpected expenses.
However, payday loans come with significant disadvantages. They usually carry extremely high-interest rates, which can make repayment difficult and lead to a cycle of debt if not paid off quickly. Many people struggle to repay payday loans on time, resulting in additional fees and interest charges. This can cause financial stress and harm your credit score if the loan isn’t repaid as agreed.
advantage and disadvantage of using of credit cards as form of borrowing
Credit cards offer flexibility and convenience, making them a popular form of borrowing. One advantage is that they allow you to make purchases and pay them off later, often with an interest-free period if paid in full each month. They can also help build your credit score if managed responsibly, and offer rewards or cashback for spending.
On the downside, credit cards often come with high-interest rates if the balance isn’t paid off quickly, leading to debt accumulation. Additionally, overspending can be tempting since credit cards provide easy access to funds, which can result in financial strain if not carefully managed. Late payments can also lead to penalties and negatively impact your credit score.
advantage and disadvantage of using ISA as savings
Using an ISA for savings has the advantage of allowing your savings to grow tax-free, meaning you won’t pay tax on the interest or returns. It’s a great way to boost your savings without worrying about tax deductions.
However, a disadvantage is that there are annual contribution limits, so you can only save a certain amount each year. Also, some ISAs may require you to lock your money in for a set period, which can limit access if you need the funds urgently.
advantage and disadvantage of using deposit and savings account as savings
A deposit and savings account offers a safe place to store your money, with the advantage of earning interest over time. These accounts are low-risk, and your savings are often protected by government insurance schemes up to a certain amount.
However, the downside is that interest rates can be quite low, meaning your savings might not grow much, especially when inflation outpaces the interest earned. Additionally, you may have limited access to your money if there are withdrawal restrictions or penalties.
advantage and disadvantage of using premium bond as investment
Premium bonds offer a unique advantage as an investment because, instead of earning interest, you have the chance to win tax-free prizes in a lottery-style draw. This can make it exciting and potentially rewarding, while also keeping your money safe, as the bonds are backed by the government.
However, the disadvantage is that there is no guaranteed return, and your chances of winning large prizes are relatively low. Additionally, the interest rate is often lower than other savings or investment options, so your money may not grow as much as it would elsewhere. Moreover, it can take time to see any returns, making it less ideal for short-term goals.
advantage and disadvantage of using bonds and gilts as investment
Bonds and gilts are relatively safe investment options, with the advantage of providing a steady stream of income through regular interest payments. They are considered low-risk, especially gilts, which are government-backed, making them a reliable choice for conservative investors. Bonds can also be easily traded, offering some level of liquidity.
On the downside, the returns from bonds and gilts are usually lower compared to riskier investments like stocks. If interest rates rise, the value of existing bonds may fall, leading to potential losses if sold before maturity. Additionally, bonds have fixed interest rates, so they might not keep up with inflation, reducing their purchasing power over time.
advantage and disadvantage of using shares as investment
Investing in shares offers the advantage of potentially high returns, as the value of shares can increase over time, and investors can also earn dividends. This makes shares a good option for long-term growth, especially in companies that perform well. Moreover, shares are relatively liquid, meaning they can be bought and sold easily.
However, the downside is that shares come with higher risk. The value of shares can fluctuate significantly due to market conditions, and there is no guarantee of returns. If the company performs poorly, you may lose money, and dividends may not always be paid. Additionally, investing in shares requires a good understanding of the market and can be volatile in the short term.
advantage and disadvantage of using pension as investment
A pension is a long-term investment that provides the advantage of helping you save for retirement while benefiting from tax relief on contributions, which can boost your savings. Additionally, pension funds are often managed by professionals, offering a diversified portfolio that can grow over time.
However, the disadvantage is that pensions are typically locked away until retirement, meaning you cannot access your funds easily or without penalties before a certain age. Also, pension investments are subject to market fluctuations, and the value of your pension can vary depending on how the investments perform. Finally, there are annual contribution limits and potential fees associated with managing the pension.
different types of insurance?
car
life
pet
travel
home
health
types of capital income?
loan
mortgage
debentures
owner capital
shares
types of revenue?
cash sales
credit sales
rent received
commission received
interest received
discount received
types of tangible assets?
machinery
equipment
vehicles
inventory
property
types of intangible assets?
patents, trademarks, copyrights, franchise rights
capital expenditure example?
brand name
goodwill
buildings and premise
machinery and equipment
trademarks
vehicles
revenue expenditure examples?
wages and salary
rent
marketing
travel expenses
repairs
example of internal source?
retained source
net current assets
sale of assets
example of external source?
owner capital
loans
crown funding
example of inflows?
cash sales
credit sales
loans
capital introduced
sales of assets
bank interest received
example of outflows?
Cash purchases
Credit purchases
Rent
Rates
wages
Salaries
Utilities
Purchase of assets
VAT
Bank interest paid
Loan repayments
Insurance
examples of financial institutions?
banks of England
banks
building societies
credit unions
national savings and investments
insurance companies
pension companies
pawn brokers
payday loan companies
advantage and disadvantage of using bank
Using a bank has both advantages and disadvantages. The main advantage is that banks offer security for your money, protecting it from theft or loss. They also provide convenience with online banking, mobile apps, and access to ATMs. Additionally, banks offer interest on savings and provide access to loans and credit.
However, banks can charge fees for account maintenance or services, and in some areas, access to bank branches or ATMs may be limited. Banking services can also be complicated, and overdraft fees can be costly if you’re not careful. Lastly, there are privacy concerns, as banks store personal financial data.
advantage and disadvantage of using building society
Using a building society has its advantages. One of the main benefits is that building societies are typically owned by their members, which means they often offer competitive interest rates on savings and favorable terms on mortgage products. They also tend to focus on personalized customer service and reinvesting profits into benefits for members rather than prioritizing shareholder profits.
On the other hand, there are some disadvantages to consider. Building societies may offer a more limited range of financial products and services compared to larger banks. They can also be less technologically advanced, which might affect the convenience of online banking or digital services. Additionally, their geographical reach may be more limited, making access to physical branches and services less convenient for some customers.
advantage and disadvantage of using credit union
a credit union offers serval advantage such as lower interest rates, higher interest on savings and it is aa good option for people looking for affordable banking. however there also disadvantages, like fewer branches, limited services and strict rules which make harder for people to join a credit union
advantage and disadvantage of using national savings and investments
national saving and investments are safe because they are backed by the government. They offer tax-free savings and different saving options.
however, the interest rates can be lower than banks and some accounts make it hard to access your money quickly and their are also fewer options that give higher return.
advantage and disadvantage of using insurance companies
insurance companies help protect against financial loss by covering costs for accidents, health issues or damages.
however insurance can be expensive and some claims may take time to process or may not be fully paid due to polices rules.
advantage and disadvantage of using pension companies
pension companies help people save money for retirement ensuring they have income when they stop working. They offer long- term financial security to employment.
however, there are disadvantages such as limited access to money until retirement possible fees, and risk of lower return
advantage and disadvantage of using pawn brokers
pawn brokers provide quick cash loans without credit checks by using valuables as security. This makes them helpful for people who need money fast.
however they charge high interest rates and if the loan is repaid on time it can be lost.
advantage and disadvantage of using payday loans
payday loans provide quick cash for unexpected thing without needing a credit check. they are easy to get and help people short term financial problems.
however, they have very high interest and fees which can make it hard repay which makes more debt.
example of communicating with customers?
email
letter
visit the branch
telephone the bank
mobile banking
postal banking
advantage and disadvantage of visiting a bank
visiting a bank allows people to get help with their money, open accounts and apply for loans. banks offer security and different financial services.
however visiting a bank can take time due long queues and some services may have fess or strict rules.
advantage and disadvantage of using telephone banking
telephone banking allows people to manage their accounts , check balance and transfer money easily over the phone. Its convenient and available 24/7.
however, it may lack the personal touch of in-person service and there a risk of security issues if proper precautions aren’t taken.
advantage and disadvantage of using online banking
online banking allows people to manage their accounts, pay bills and transfer money from anywhere at any time. it very convenient and saves time.
however, it can have security risk like hacking and old people might have difficult to use this technology
advantage and disadvantage of using postal banking
postal banking allows people to manage their finances and make transactions at the post offices. It is very convenient for those who don’t have easy access to banks.
however, it may offer fewer services and there could be longer waiting time and limited avalibabilty.
advantage and disadvantage of using mobile banking
mobile banking allows people to manage their accounts, transfer money and pay bills using their mobile phones. it is very convenient and easy to use.
however it can have security risks such as hacking and may not always work because poor internet connections.
what different types of financial services?
FCA
FOS
advantage and disadvantage of using FCA
The FCA helps protect consumers by regulating financial companies and ensuring they follow the rules fairly. It give people confidence that business is trustworthy and safe to use.
however the FCA regulations can sometimes make financial services more expensive or complicated for business to offer.
advantage and disadvantage of using FOS
The FOS offers free and impartial way to resolve disputes between consumers and financial companies, ensuring fair treatment without the need for expensive legal help.
however, the process can sometimes be slow and the decisions may not always fully satisfy everyone involved.
example of advice and guidance?
citizens advice
independent financial advisor
price comparison websites
money advices services
debt counsellors
mobile phone contract
buying a property
insurance companies
loans
savings
benefits and limitations of family and friends?
using friends and family for help and advice can be beneficial because it often comes with trust, flexible terms and a personal understanding of your situation.
however relying on family and friends could make a strain in your relationships and might not always not be reliable or professional solution.
benefits and limitations of using a bank
banks offer secure places to store money and a wide range financial services, including loans, savings and checking account. They often convenient online and mobile options along with reliable customer support.
however, banks may charge fees, have strict account requirements and sometimes offer less personalized services compared to to smaller financial service.
benefits and limitations of using citizen advice
Citizens Advice is a service that offers free and confidential help to people who need support with things like money, housing, work, or legal issues. One of the main benefits is that it is free and easy to access, and the advisors are trained to give good, clear advice. It also helps people understand their rights and what steps to take next. However, there are some limitations. Sometimes it can be hard to get an appointment because they are very busy, and they might not be able to help with very complex problems. Also, they give advice but cannot make legal decisions. Overall, it is a helpful place for basic support and guidance.
benefits and limitations of independent financial
An independent financial adviser (IFA) gives people advice on money matters like saving, investing, pensions, and insurance. One big benefit is that they can offer advice on a wide range of products from different companies, so they help find the best options for your needs. They also have expert knowledge, which is useful for making smart financial choices. However, there are some limitations. Their services usually cost money, either through fees or commissions, which not everyone can afford. Also, not all advisers are the same—some may have more experience than others. Overall, IFAs can be very helpful, but it’s important to check their qualifications and costs before using them.
benefits and limitations of price comparison website
Price comparison websites help people find the best deals on things like insurance, flights, phones, and energy bills. One of the main benefits is that they save time by showing prices from different companies all in one place. They also help users find cheaper options and make better decisions based on features and reviews. However, there are some limitations. Not all companies are listed on these websites, so you might miss out on some deals. Also, some sites may show results based on paid promotions rather than what’s truly best for the user. Overall, price comparison websites are useful for saving money and time, but it’s important to double-check the information and shop around.
benefits and limitations of using debt counsellors
Debt counsellors help people who are struggling to manage their money and pay off debts. A big benefit is that they give expert advice on how to deal with debt and can help create a plan to pay it off. They can also talk to creditors (people or companies you owe money to) on your behalf, which can reduce stress. Some debt counsellors offer free services through charities. However, there are some limitations. Some counsellors charge fees, which can be hard for someone already in debt. Also, not all debt solutions will work for everyone. Overall, debt counsellors can be very helpful, but it’s important to choose a trusted one and understand any costs involved.
benefits and limitations of money advice service
The Money Advice Service is a free and impartial service that helps people manage their money better. One of the main benefits is that it offers clear and trustworthy advice on things like budgeting, saving, borrowing, and dealing with debt. It’s easy to use and available online, over the phone, or in person. It also has useful tools like budget planners and calculators. However, there are some limitations. The service gives general advice and may not be detailed enough for more complex financial problems. It also doesn’t recommend specific products or companies. Overall, the Money Advice Service is a great starting point for managing money, but some people may need more personal or in-depth help.
example of current assets?
Cash and Cash Equivalents
Accounts Receivable
Raw materials
Marketable Securities
Prepaid Expenses
example of non current assets?
long-term investments, land, property, plant, and equipment, and trademarks
net cash flow
Total Cash Inflow - Total Cash Outflow
closing balance
Opening Balance + Net Cash Flow
total revenue
Selling Price X Quantity Sold
total costs
Fixed Cost + Total Variable Costs
profit
Total Revenue - Total Costs
total contribution
Sales Revenue - Total Variable Costs
contribution per unit
Selling Price - Variable Cost (per unit)
profit using contribution
Contribution Per Unit x Margin of Safety
break-even output
Total Fixed Costs / Unit Contribution
margin of safety
Actual Sales - Break-Even Level of Output
revenue
Unit Price X Quantity Sold
gross profit
Sales Revenue - Cost of Goods Sold
cost of good sold
Opening Inventory + Purchases - Closing Inventory
profit/ loss of the year
Gross Profit - Expenses + Other Income
net book value
Cost - Depreciation
net current assets
Current Assets - Current Liabilities
net assets
Non-Current Assets + Net Current Assets - Long Term Liabilities
capital employed
Opening Capital + Profit of the Year less drawings
balance sheet
Net Assets = Capital Employed
gross profit margin
Gross Profit / Revenue x 100
mark up
Gross Profit/Cost of Sales x 100
profit margin
Profit/Revenue x 100
return on capitial employed
Profit/Capital Employed x 100
current ratio
Current Assets/ Current Liabilities
liquid current ratio
Current Assets - Inventory/ Current Liabilities
trade receivable days
trade Receivables/Credit Sales x 365
trade payable days
Trade Payables/Credit Purchases x 365
average inventory turnover
Average Inventory /Cost of Sales x 365
