Business: Finance Exam Flashcards
Financial Services Compensation Scheme (FSCS)
- Consumer Protection
- Organisation
- Pays Compensation to a consumer
- This happens if the service provider is unable
- Protects up to £85,000
Office of Fair Trade (OFT)
- Consumer Protection
- Government Organisation
- Established to regulate all markets
- Fair prices
- Healthy competition
Legislation: Consumer Credit
- Consumer Protection
- Are laws passed
- Enforces the regulation of any firm offering credit
Financial Conduct Authority (FCA)
- Consumer Protection
- Independent Organisation
- Regulates the actions of providers of financial services
- Funded by membership fees
- Focuses of 3 key areas
1) AUTHORISATION
2) SUPERVISION
3) ENFORCEMENT
Financial Ombudsmen Service (FOS)
- Consumer Protection
- Has compulsory fees
- Government Interest
- Consumer disputes with financial service providers
Banks
*Handles financial transactions and stores money
*Services offered: holding deposits, making payments and supplying credit
+Has Security
-Savings protected up to £85,000 if the bank goes bankrupt
Types of Income: Investment
- Capital
- Loans
- Mortgages
- Shares
- Owner’s Capital
- Debentures
Types of Income: Revenue
- Cash Sales
- Credit Sales (You don’t get the money immediately)
- Rent received
- Commission received
- Interest Rate
- Discount received (Goodwill)
Types of Asset: Current Asset
-Cash and other company assets that will be turning into cash within 1 year
Types of Assets: Non-Current
-Long-term investment where the full value won’t be realised for a full year
Types of Assets: Tangible
-Physical item
Types of Asset: Non-tangible
-Non physical
Bank Of England
*Maintains Finance for all of the UK
+Makes a stable economy
-Not a bank for the members of the public
-Can raise interest rates making borrowing more expensive
Building Societies
*Members that are part owners
*Members can vote
*Not on the stock exchange
+Allows higher interest
-Savings on protected up to £85,000
-Lack of business drive
Insurance Companies
*Protect against the risk of loss in return for a premium
+Planning is made easier
-Premiums will be charged to ensure share holder needs are met
Current Accounts: Standard
- Direct debit (used for bill payments, etc)
* Standing orders (you have control)
Current Accounts: Basic
- Electron cards which only take money out at a cash point
- Used for people with a low credit score
- Could be for under 16s
Current Accounts: Student
*Interest free overdraft
Current Account: Premium
- Pay a monthly fee
* Breakdown
Credit Unions
-Not-for-profit
-Responsible for supporting a community made up of its members
-Members are the owners and have voting rights
+Offer additional benefits to the community/good cause
-Lack of business drive
National Savings and Investments
*Government-backed
*Offers a secure saving option
*Options include: ISAs, premium bonds, gilts & bonds
+100% Savings
+No upper limit
+Offers additional services
-Rates are variable
-Not easy access due to a lack of highest presence
Pension Companies
*Sell policies to individuals to allow them to save now to fund retirement
+Security
+Experts are employed to make investment decisions
-Money already invested in a pension cannot be released
Pawnbrokers
*Loan money against a personal asset
+Quick way of getting cash
+Amount of money given for the Asset is often substantially lower than its actual worth
Payday Loans
*Short term
*Bridge the gap
*Small amounts at a high rate
+Quick way of getting cash
-Interest charges are high
-Final sum substantially higher the initial amount
Citizens Advice
*An Organisation ran by charities that offers advice on both financial/non-financial issues
*Covers: debt, benefits, banking, pensions and insurance
+Free service
+Wide range covered
-Not professional
Independent Financial Advisor (IFA)
*Professionals that offer independent advice on financial matters
+Services are regulated
-There’s no unbiased guarantee
Price Comparison Websites
*They’re websites that collate prices for similar goods/services \+24/7 access \+Free service -Not 100% up-to-date -Not unbiased
Money Advice Service
*Government Organisation \+Government funded \+Impartial -No physical presence -Advice can be generic rather than personal
Individual Voluntary Arrangements
*Government Organisation that allows an individual to declare themselves bankrupt
+Helps manage debt payment
-Negative side is it will affect their future credit ratings
-“Setup” And “Handling Fees” are charged for
Debt Councellors
*Professionals who offer independent advice on how to manage your debts
+Specialised professional
-Services will be charged for
Creditor
- These are the people your business owes money to
- “Trade Payables”
Profit
-Surplus achieved when total revenue is than total costs
Creditors
-Who owe your business money
Debitor
- These are the people who owe your business money
- “Trade Recievables”
Loss
-Shortfall suffered when total revenue is lower than total costs
Gross Profit
-Sales revenue - costs of goods sold
Sales Revenue
-Quantity sold x Selling Price
Net Profit
- Gross Profit - Expenses
- E.g. rent, advertising,etc…
Economic Factors
- Gross Domestic Product (GDP)-income in circulation
- Inflation- value of money coming in
- Minimum Living Wage
- Interest Rates
- Supply/Demand
- Exchange Rate
Social Factor
- Life stages
- Risk spending (borrowing credit)
PEA|RLS
- “PEARLS” is a acronym for remembering what is “Debit” and what is “Credit”
- “PEA” stands for: Purchases, Expenses and Assets which are all forms of Debit
- “RLS” stands for: Revenue, Liabilities and Sales
Double Entry
- Money has to be seen twice
- Assets = Liabilities (accounts have to balance)
- Debits (gains value) = Credits (gives value)
