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Business Yr 9 > Financial Literacy > Flashcards

Financial Literacy Flashcards

1
Q

What is Financial Literacy?

A

The ability to understand the and effectively use various financial skills, including personal financial management, budgeting, and investing.

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2
Q

What are Economics?

A

The study of human and group activities related to work and the use of resources to achieve satisfaction.

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3
Q

What is Scarcity?

A

Scarcity refers to limitations - insufficient resources, goods, or abilities to achieve the desired outcomes.

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4
Q

What is a market?

A

A place or situation where buyers and sellers interact for purposes of trade or exchange.

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5
Q

What is a price?

A

The sum of money paid for goods and services in a market.

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6
Q

What is a want?

A

A want is something we desire.

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7
Q

What is a need?

A

A need is something we require.

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8
Q

What is supply?

A

The quantity of goods or services offered for sale in a market.

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9
Q

Demand

A

The quantity of goods and services that will be purchased in a market.

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10
Q

Supply and Demand Curve

A

See image

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11
Q

Accounting

A

Accounting is the process of identifying, measuring, interpreting and communicating financial and other information to interested parties.

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12
Q

Assets

A

A resource with economic value that an individual, company or country owns or controls with the expectation that it will provide a future benefit.

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13
Q

Liabilities

A

Liabilities are items or amounts that a business owes.

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14
Q

Income

A

Money received, especially on a regular basis, for work or through investments.

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15
Q

A salary

A

A salary is based on one year’s work and is usually paid in equal weekly, fortnightly or monthly payments.

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16
Q

The accounting process

A
  1. A transaction occurs
  2. Source documents are produced.
  3. Journals are written.
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17
Q

Wage

A

A wage is usually a weekly or fortnightly payment based on the number of hours of work completed.

18
Q

Commission

A

A commission is earned when employees are paid a percentage of the value of goods that they sell.

19
Q

Expenses

A

Generally, expenses are the costs incurred in or required for something.
In a business, expenses refers to the money spent and the costs incurred in pursuing revenue.

20
Q

Fixed Expenses

A

Those that are the same for each period.

21
Q

Variable Expenses

A

Vary across the course of the budget.

22
Q

Liquidity

A

The degree to which an asset can be quickly bought or sold in the market without a significant change in price.

23
Q

Rate of Return

A

The annual income from an investment expressed as

24
Q

Risk and Return

A

The higher the risk, the greater the return. The lower the risk, the lower the return.

24
Q

Capital Growth

A

Profit made on an investment or purchase of an asset, measured by the increase in its value over the cost price.

25
Q

Shares

A

A share (or a stock) represents part ownership in a business.

26
Q

Diversification

A

An investment strategy that lowers a portfolio’s risk to help achieve more stable returns. It involves investing across different asset classes and then further diversifying by buying different assets across the asset class.

27
Q

Term deposits

A

A term deposit is a cash investment held at a financial institution.
Money is invested for an agreed rate of interest over a fixed amount of time, or term.
They facilitate greater capital security and a set return.
The money can only be withdrawn at the end of the period – or earlier with a penalty attached.

28
Q

Cryptocurrency

A

Crypto-assets (crypto) also known as cryptocurrencies, coins or tokens are digital assets that do not have a physical form. They may not be backed by physical assets.

29
Q

Indebtedness

A

Indebtedness refers to the state of being indebted to another party for an amount of money borrowed.

30
Q

Good debt

A

When money is borrowed to purchase an item that will increase in value (appreciating asset).
Helps generate income and increase net worth.
Often there are tax incentives for good debt investments.

31
Q

Bad Debt

A

When money is borrowed to purchase items that decrease in value over time (depreciating assets).
Limits what can be done with money as interest payments and fees drain away savings.

32
Q

Personal Loans

A

A personal loan is a smaller loan than a mortgage, and is usually used to finance a car or make home renovations.

33
Q

Sources of Personal Loans

A

Banks
Credit Unions
Financiers

34
Q

Insurance

A

Insurance is a risk-transfer, loss-spreading arrangement. Its purpose is to distribute risk through providing a mechanism by which individuals and organisations purchase, by way of a premium, insurance products to mitigate that risk.
Risk is then transferred to the insurer which indemnifies them against future events that may cause loss.

35
Q

Budget

A

A budget is a planning device to help a person or business achieve their financial goals.

36
Q

Surplus and Deficit

A

SURPLUS
If a consumer’s income is greater than their expenses, money can be saved and invested or they can spend more.
DEFICIT
If expenses are greater than income a consumer is overcommitted and needs to either earn more or spend less.

37
Q

Who Pays Tax?

A

INDIVIDUALS
When they earn income (wages, commission etc.), they pay income tax.
BUSINESSES
Businesses pay tax on profits (sole traders – within the owner’s tax return; companies – 30% flat rate as they are an individual legal entity).

38
Q

Tax File Numbers

A

Your tax file number (TFN) is your personal reference number in the tax and super systems.

39
Q

Tax Return

A

A form provided by the Australian Taxation Office on which a taxpayer reports taxable income with permitted deductions and exemptions, and computes their tax liability.
They cover the financial year from 1July to 30June.

40
Q

Tax Deductions

A

Money which has been spent to earn income (which hasn’t been reimbursed) can be claimed as a tax deduction if a record is held to prove it.

Business Yr 9 (1 decks)

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