Exam Questions Flashcards
Identify two different types of current accounts (2 marks)
Standard
Packaged
Premium
Basic
Student
Identify two features of travel insurance (2 marks)
Loss/theft of belongings
Damage of belongings
Illness
Cancellation of holiday
Cancelled/missed flight
Medical emergencies
Protects individuals or groups
Discuss the benefits of contactless payments (6 months)
Benefits
.convenient payment method, increasingly accepted at many outlets
. Don’t need to remember a pin
. Offers the same protection as chip and pin, don’t need to worry about fraudulent use
. Quick and convenient payments, speeds up transaction time
. More convenient, can use app on mobile phone (e.g Apple Pay),/ don’t need to carry a card
. Max of £30 per transaction and 4 transactions a day can limit spending
Drawbacks
. Consumers may be more likely to spend more as it is easy to do which could give increased debt and fees for them
. May be a greater risk of fraud for small values if the card is stolen; up to 4 transactions of up to £30 each per day
. Max of £30 per transactions reduces the flexibility
describe how using break even could be useful for a business (2 marks)
break even could be useful for a business to know how many units need to be sold in order to make a profit, it can help a business to plan production levels. Such as planning any additional equipment or workers that might be needed
state two organisations that provide consumer protection in relation to personal finance (2 marks)
FCA
FOS
FSCS
give two advantages to the consumer of using gilts as a form of saving (2)
regular/guaranteed income
can be sold at any time/savings can be accessed
gov backed
fixed interest/ability to earn interest
give two ways an investor can financially benefit from buying shares in a business (2)
share price increasing in value since the original purchase
dividends paid by the company to the investor
they could a receive a bonus issue from shares
return from the investor could be greater than the interest received from a bank
explain two advantages to the consumer of visiting a bank branch in person (4)
there will be access to a range of services for those without devices or the internet or who choose not to use this method. this will reduce anxiety of conducting banking in ways other than face to face.
consumers are able to get a more personalised service. this may improve the decisions that consumers make when choosing/reviewing financial products
Stefani often goes on holiday. She has a credit card with an outstanding balance, that increases when she pays for her holidays. Stefani usually finds an offer that has 0% interest on balance transfers. She then transfers the balance of her existing credit card account to a new credit card company. These offers usually last for 12 months, then the interest rate changes to the company’s standard interest rate. There is usually a small fee charged for the balance transfer.
Stefani has often done this sort of balance transfer in recent years. Moving her credit card balance has saved her money on interest repayments. However, the credit card balance has now reached its limit of £8 000. Stefani has saved approximately £1 000 to repay part of the balance owing. She has saved some of this money by not paying interest.
discuss whether Stefani should continue to transfer her outstanding credit card balance to a new provider (6)
Advantages of transferring credit card
balances to a new credit card provider
.Lower interest rates means paying less interest on existing debt. If Stefani can get a 0% card she could get a year’s credit for free (minus any fees)
• Many providers offer additional incentive to encourage balance transfers
• Put the money saved from 0% interest into a savings account and earn money on it
• Consolidate any other debts into one payment
• May get an increased limit by switching provider which could positively impact on her credit score if payments are maintained
Disadvantages of transferring credit card balances to a new credit card provider
• May encourage excessive borrowing if credit limits are increased
.Inability to find a 0% balance transfer offer could prove very expensive
.Transfer limit usually applies so she can only transfer so much
• Credit card provider might try and encourage the purchase of additional products, which she might not need (e.g. fraud protection)
• Other purchases made on the card may be charged at the standard rate of interest
•Increasing her credit card balance may affect Stefani’s credit rating/score, which could affect her ability to access other products, e.g. mortgages, personal loans
State the impact that a discount received would have on the profit for the year in an income statement (1)
The profit for the year would increase
State one current asset that could be included in a statement of financial position (1)
Inventory
Cast at bank
Cash in hand
Trade receivables
State one non current asset that could be included in a statement of financial position (1)
Vehicles
Equipment
Premises
State one less current liabilities that could be included in a statement of financial position (1)
Trade payables
Over
Draft
State one non current liability that could be included in a statement of financial position (1)
Bank loan
Net assets
State one financed by that could be included in a statement of financial position (1)
Capital
Retained profit
Capital employed
Explain one advantage to a business of using debentures as a source of income (2)
The interest rate is fixed, this allows the company to plan their finances
Discuss the ads and dis of using the reducing balance method to depreciate value of the vehicle accounts (6)
Advantages
• More depreciation in the early life of the asset and less in the
later years of the asset’s life, which helps offset greater repair
costs as the vehicles age
• Gives a more realistic valuation of the vehicles as they lose
more value in the earlier years.
• Prevents overstating the vehicles value so would comply with
accounting concepts
• Prevents understating the expense / overstating profits so
would comply with accounting concepts
•Give greater tax benefit in early years which would help grow the
•
business
Disadvantages
• Harder to calculate than the straight line method as you
will need to recalculate the expense each year figure based
on the net book value at the end of the previous year
• It is harder to work out what percentage to use to
depreciate over the asset’s lifetime
• Will produce lower profit figures in the early years in the
life of the asset
Discuss the personal attitudes of people in old age towards borrowing and saving (6) - borrowing
The person attitudes of people in old age means they’re less likely to borrow as they may be reliant on a fixed income like a pension, and may struggle with repayments. People in their old age are more likely to have and understanding of the risks of over borrowing and have possibly borrowed throughout the other stages of their life, and would therefore be hesitant to borrow anymore within the old stage of their life, u less they felt it was necessary to do so. It should be considered that people are living longer within their old age. There may be reasons that someone in their old age may borrow, such as to support adult dependents or if their health is poor, they may need to pay for care home fees.
Discuss the personal attitudes of people in old age towards borrowing and saving (6) - savings
The attitudes of people in their old age to saving is that they would want to protect their inheritance in order for their dependents to have it. They may have worked hard during the other stages in their life and now want to protect any money saved as inheritance. This means that they might be more inclined to save rather than spend. This is in contrast to a young adult that may be saving for a deposit for a house, and once they’ve reached the targeted amount would use all the savings on the purchase of their home. In addition, some people within their old age may have paid off the mortgage on their home and may now consider downsizing, as their dependents may have moved out. This would mean that they would be able to release equity in their home and reduce expenditure, which would in turn create additional savings for them.
Give two features of a premium current account (2)
Pay a monthly tax
Break down cover
Travel insurance
Explain one advantage to the consumer of using pre paid credit cards when on holiday (2)
Allows you to control spending as the money uploaded is pre paid onto the card and the money can get returned if you do not spend it all
Explain two advantages to the investor of purchasing shares in a business (4)
Share prices may rise - this will increase investment sum
Personal possessions are not at risk - you can only lose up to the sum invested
Give 2 types of intangible,d non current assets
Good will
Brand names
Patents
Trade marks
Identify 2 caused die a change in capital for a sole trader (2)
Capital injection
Drawings
Describe how capital expenditure is treated in the financial statement of a business (2)
CE - it’s about buying non current examples e.g machinery, land, vehicles
And then it will be on the statement of financial position
If your dealing with a vehicle then you could focus on the depreciation . Depreciation features on the income statement.
Identify 2 sources of advice and guidance about person finance (2)
Citizen’s advice
FOS
independent financial advisors (IFA)
Money advice service
Discuss which type of car insurance would be best for … (6 marks)
For third party:
It is the minimum legal requirement cover in the UK
Some insurers might not offer this level of cover
It will not pay if the car is stolen or damaged
Third party, fire and theft:
Covers damage of fire
Covers for third party damage if you have an accident
Cheap way to build no pay claims discount
Fully comprehensive:
Covers third party damage if you have an accident
Covers damage for theft, stolen, fire and wind screen
Outline what a semi variable cost is (2)
Costs that are composed with a mix of fixed and variable components.
Costs such as electric charge have a standing charge and charged per unit is used
Outline what is meant by the term ‘ drawings’ in a financial document (2)
Is money that is taken out of a business by the owners for their own personal use
