Finance exam

Question 1

Definition of cash

Answer 1

notes and coins in a wide range of denominations

Question 2

Definition of debit card

Answer 2

issued by banks with payments for goods and services being deducted directly from a current account

Question 3

Definition of credit card

Answer 3

issued by financial institutions allowing customers to delay payments for goods and services

Question 4

definition of cheque

Answer 4

a written order to a bank to make a specific payment for a specific amount of money from one person’s account to another account

Question 5

definition of electronic transfer

Answer 5

payment is transfered directly from one bank account to another

Question 6

direct debit definition

Answer 6

an agreement made with the bank allowing a third party to withdraw money on an account for a set day to pay for goods or services recieved e.g a gym membership

Question 7

contactless card definition

Answer 7

cards with an enbedded chip and antenna that enable customers to wave to their card over a reader at a point of sale for an automatic transaction

Question 8

standing order definition

Answer 8

an agreement made with the bank to transfer a fixed sum of money to a third-party account on a set date on a regular basis e.g a fixed loan repayment

Question 9

pre-paid card definition

Answer 9

money is uploaded onto a card with transactions then withdrawn to reduce the balance

Question 10

charge card definition

Answer 10

issued by financial institutions allowing customers to delay payments for goods and services for a short period of time with the balance being paid off in full at each statement date

Question 11

store card definition

Answer 11

issued by a retail outlet to allow customers to delay payments for goods and services - similar to a credit card but only for a specified store

Question 12

mobile banking definition

Answer 12

the ability to carry out financial transactions using mobile devices such as phones or tablets

Question 13

What is Bankers Automated Clearing Service (BACS) Faster Payment

Answer 13

A system that allows the transfer of payments directly from one bank account to another in 3 working days (unless faster payment is available)

Question 14

What is Clearing House Automated Payment Systems (CHAPS)

Answer 14

A system that allows the transfers of payments directly from one bank account to another, usually on the same day

Question 15

What is an Individual Voluntary Arrangement (IVAs) bankruptcy

Answer 15

A government organisation which allows an individual to declare themselves bankrupt while agreeing to pay off all or part of the money they owe to the creditors

Question 16

what are advantages of an IVA

Answer 16

you can combine multiple debts into one debt, this allows an individual to manage and stay up to date with multiple debts at once

based on what the individual can afford

Question 17

6 marker scheme for ad and disad

Answer 17

advantage, example, relate to scenario
advantage, example, relate to scenario
advantage, example, relate to scenario
disadvantage, example, relate to scenario
disadvantage, example, relate to scenario

Question 18

what are the disadvantages of IVA

Answer 18

affect individuals credit rating,
also a long term debt, therefore take a long time to pay off

Question 19

12 marker scheme

Answer 19

short intro, relate to scenario and purpose what they need (short para)
1. option 1 go through advantages and disadvantages, relate to scenario
2. option 2 go through ads and dis, RTS
(Go through all options)
Compare 2 favorites
conclude, refer to situation and purpose for the chosen option, elaborate

Question 20

what is a standard current account

Answer 20

this type of account provides full day-to-day banking facilities, such as cheque book, debit card, easy access to your money and an authorised overdraft fascility

Question 21

what is a packaged, premium account

Answer 21

this type of account usually has an annual fee or additional charge in return for offering extra incentives (rewards). These benefits can vary but may include offers such as discounted home insurance, no fee overdraft, and premium access to popular event tickets

Question 22

what is a basic account

Answer 22

this account offers limited features and would be typically held by a person with no credit history in the UK or a poor credit history

Question 23

what is a student account

Answer 23

these are designed to assist young people and students to become prudent with their personal finances. They may come with bonus features, such as interest free overdraft facilities

Question 24

what is overdraft (type of borrowing)

Answer 24

allows an individual to withdraw money that they do not actually have in their current account

Question 25

what is a personal loan (type of borrowing)

Answer 25

allows an individual to borrow a set amount of money which is to be repaid in regular installments, with interest

Question 26

what is a hire purchase (type of borrowing)

Answer 26

allows an individual to have use of an item immediately but pay for it in regular instalments. The property is only owned by the individual when the final instalment has been paid off

Question 27

what is a mortgage (type of borrowing)

Answer 27

a long term loan to fund the purchases of assets e.g a property which will be paid off over a long period of time e.g 25 years in time and recieving wage

Question 28

what is a credit card

Answer 28

allows an individual to pay for goods or services using a card with a statement issued at the end of each month. The balance can be paid in full without incurring interest, or in smaller amounts without interest charge

Question 29

what is a pay day loan

Answer 29

a short-term source of finance that can help to bridge the gap between the present moment in time and recieving a wage

Question 30

What is an Individuals Savings Account (ISA)

Answer 30

a tax-free way to save or invest

Question 31

What is a Deposit and Savings account

Answer 31

an account where interest is paid on the balance

Question 32

what are types of financial institutions

Answer 32

Bank Of England, banks, building societys, credit unions, pension companies, pay-day loans, pawnbrokers

Question 33

Who are Citizens Advice

Answer 33

an organisation, run by charities, that offers a advice on a wide range of issues both financial and non-financial

Question 34

What are Independent Financial Advisors (IFA)

Answer 34

Professionals who offer independent advice to their clients on financial matters e.g savings, mortgages and investments

Question 35

What is a Money Advice Service

Answer 35

a government organisation set up to offer free and impartial financial advice in the UK

Question 36

What is a debt counsellor

Answer 36

a professional who offers independent advice on how best to manage debt

Question 37

what is debt factoring

Answer 37

selling the debts of a business to a third party in order to recieve a quick cash injection

Question 38

what is leasing

Answer 38

paying to use an asset in instalments, however the ownership of the asset remains with the supplier throughout the lease agreement

Question 39

what is trade credit

Answer 39

a period of time, offered by suppliers, to allow the customer to purchase now and pay later

Question 40

what is grants

Answer 40

a lump sum of money provided to a business by the government or another organisation to be used for a specific purpose

Question 41

what is break-even analysis

Answer 41

Break-even is the point at which a business is not making a profit or a loss. The money recieved from sales is the same as the money being spent on costs
Total Revenue = Total Costs

Question 42

what are fixed costs

Answer 42

costs that do not vary with output. They remain the same e.g rent

Question 43

what is a cash flow forecast

Answer 43

this tries to predict the cash flowing into and out of a business. A healthy cashflow is crucial to survival of a business

Question 44

what is liquidity

Answer 44

measures a firms ability to meet short-term cash payments