Finance exam Flashcards by Holly Gwynne

Definition of cash

notes and coins in a wide range of denominations

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Definition of debit card

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

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Definition of credit card

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

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definition of cheque

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

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definition of electronic transfer

payment is transfered directly from one bank account to another

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direct debit definition

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

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contactless card definition

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

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standing order definition

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

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pre-paid card definition

money is uploaded onto a card with transactions then withdrawn to reduce the balance

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charge card definition

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

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store card definition

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

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mobile banking definition

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

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What is Bankers Automated Clearing Service (BACS) Faster Payment

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

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What is Clearing House Automated Payment Systems (CHAPS)

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

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What is an Individual Voluntary Arrangement (IVAs) bankruptcy

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

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what are advantages of an IVA

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

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6 marker scheme for ad and disad

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

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what are the disadvantages of IVA

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

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12 marker scheme

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

what is a standard current account

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

what is a packaged, premium account

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

what is a basic account

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

what is a student account

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

what is overdraft (type of borrowing)

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

what is a personal loan (type of borrowing)

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

what is a hire purchase (type of borrowing)

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

what is a mortgage (type of borrowing)

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

what is a credit card

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

what is a pay day loan

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

What is an Individuals Savings Account (ISA)

a tax-free way to save or invest

What is a Deposit and Savings account

an account where interest is paid on the balance

what are types of financial institutions

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

Who are Citizens Advice

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

What are Independent Financial Advisors (IFA)

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

What is a Money Advice Service

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

What is a debt counsellor

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

what is debt factoring

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

what is leasing

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

what is trade credit

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

what is grants

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

what is break-even analysis

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

what are fixed costs

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

what is a cash flow forecast

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

what is liquidity

measures a firms ability to meet short-term cash payments