Business and Personal Finance Flashcards
What are the four functions of money?
- unit of account - goods and services
- means of exchange- allows people to trade
- store of value- keeping a specific item for its value
- legal tender- form of payment
what are a few ways to pay?
- cash
- debit card
- cheque
what is an advantage of using cash?
widely accepted and its a physical form of payment
what is an advantage using debit card?
no need to carry lots of cash and its a secure payment method
what is an advantage of using a cheque?
can only be checked out from the name its given too
What is a disadvantage of using cash?
can easily get stolen and cannot be used online
What is a disadvantage of using debit card?
not accepted for small purchases in specific stores
What is a disadvantage of using a cheque?
easy for the consumer to create mistakes
what are the four types of current accounts?
- standard account
- premium account
- student account
- basic account
what are the advantages of a standard account?
- convenient for regular payments
- offers a wide range of facilities
what are the advantages of a premium account?
- has extra perks
- no charges on credit balances
what are the advantages of a basic account?
- free to open
- provides basic features
what are the advantages of a student account?
- free to open
- provides different offers to students
what are the disadvantages of a standard account?
- does not have any extra features
- bank charges can be expensive
what are the disadvantages of a premium account?
- charges extra
could still face bank charges
what are the disadvantages of a basic account?
- restricted features
- no overdraft
what are the disadvantages of a student account?
-only for students
- high charges once account converts
what is an overdraft?
money you borrow from the bank in which you pay back with interest?
what is an advantage of overdraft?
- quick to arrange
-you can only borrow money when you need it
what’s a personal loan?
borrowing money from the bank which you pay back over a long period time with interest.
what are the advantages of a personal loan?
- fixed interest
- quick availability
what are the disadvantages of a personal loan?
- need to have a good credit rating
What is a hire purchase?
loan for specific items, such as a phone paying monthly, which will last a certain time frame
what is an advantage of a hire purchase?
- being able to buy an expensive item for a long period of time
what is a disadvantage of a hire purchase?
as you are in a contract having issues will cause complications
what is a mortgage?
long term borrow for a property
what is an advantage of a mortgage?
makes home ownership more affordable
what is an disadvantage of a mortgage?
pay arrangement fees to set up a mortgage
what is a credit card?
short term borrowing with there’s a limited set of money which you pay back with interest.
what is an advantage of using a credit card?
- safer to carry than cash
- build a positive credit score
what is a payday loan?
short term borrowing from the bank which you pay back with interest
what is an advantage of a payday loan?
- quick and easy to apply for
- available to everyone 18 +
what is a disadvantage of a payday loan?
- only lends a small amount of money
what is an ISA? (Individual Savings Account)
different to a standard savings account, as it is tax free.
what is an advantage of an ISA?
no tax paid on divided income
what is a disadvantage for an ISA?
not flexible
what is premium bonds?
product that is offered by NS&I which you withdraw money and cash in your ‘bonds’
what is bonds and gilts?
type of lending which happens over a period of time in return for a fixed rate of interest
what is an advantage of bonds and gilts?
its a safe and sound investment
what is an disadvantage of bonds and gilts?
Inflation can reduce the value of the interest payments and principal of a bond
what is a pension?
saving scheme, with the aim of cashing this in when you get to the retirement age
what is car insurance?
provides protection if something was to happen to your car
what is home insurance?
provides protection if something was to happen to your home
what is life insurance?
provides protection if anything was to happen to your life (against the risk death)
what is travel insurance?
provides protection linked to travelling eg lost luggage
what is pet insurance?
provides protection which are linked to the pet
what is health insurance?
provides protection linked to customers health
what are the advantages of insurance?
- provides stability and confidence
- provides guidance and legal expertise
what is the aim of Financial Conduct Authority?
to make sure that financial markets work well so consumers get fair deals/ treated fairly
what is the aim of Financial Ombudsmen Service?
where customers can contact them if they have a complaint to make against their bank or firm
Financial Services Compensation Scheme?
pay compensation to customers if a firm is unable to
What is Office of Fair Trading?
responsible for protecting consumer interests throughout the UK
what are the different ways to communicate with customers?
- Branch
- Online
- Telephone
- Mobile
- Postal
what is an advantage of using the Branch?
offers personal services so customers feel more assured
what is an advantage of using a online way to contact customers?
- quick and easy
what is an advantage of using the telephone to contact customers?
available to those who cannot access other methods
what is an advantage of using a mobile to contact customers?
quick and easy and offers instant data
what is an advantage of using postal to contact customers?
physical form of banking
what is a disadvantage of using branch to contact customers?
- time consuming and having to travel
what is a disadvantage of using online ways to contact customers?
- security issues and less personal
what is a disadvantage of using telephone to contact customers?
slower and limited ranges of features
what is a disadvantage of using mobile to contact customers?
limited services
what is a disadvantage of using postal to contact customers?
slow
what are the features of the Bank of England?
- prints bank notes
- controls inflation
- ensures stability
what are the features of the bank?
offers a safe and secure place to keep items of value
what are the features of building societies?
places where money will change hands
what are the features for insurance companies?
organisation that provides protection in the form of compensation
what are the features of pension companies?
organisation that provides a financial service in the form a pension that customers can save towards retirement
what are the features of pawnbrokers?
organisation that provides loans against items that have been offered up in the form of security
what are the features of payday loans?
provides loans for a staff period of time to cover unexpected
what are direct costs?
costs that are directly linked to the making of a product
what are indirect costs?
the costs that are not directly linked to the making of a product
what is revenue?
all the money that is going into sources of revenue
what are fixed costs?
costs that do not change with use eg rent, salaries
what are variable costs?
costs that change within use eg stock
what is break even?
point where you make no profit or loss
what is margin of safety?
how well a business is performing compared to its break even point
what are assets?
items which a business owns
what is depreciation?
reduction in the value of an asset over a period of time
what are the causes of depreciation?
age and use
what is income?
money going into the business
what is revenue income?
income that is related to the day to day trading of the organisation
