Introduction to finance and accounting Flashcards

1
Q

Define Borrowing

A

Lending ( getting ) money from a variety of places such as banks for a cost - often interest.

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2
Q

Define Saving

A

Lending ( giving ) money to a variety of places such as banks for gain - often interest.

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3
Q

What is meant by the term “ principle “

A

The amount of money that is saved or borrowed at the start of a business.

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4
Q

What is meant by the term “ Interest “

A

The amount of money earned when saving or borrowing.

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5
Q

What is “Interest rates”?

A

The mathematical basis of calculating how much is earned on savings or borrowings expressed as a percentage.

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6
Q

Who sets Interest rates?

A

Countries set their own interest rates through a central bank.

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7
Q

Define Compound Interest

A

Interest that is paid not only on the principal of a loan or deposit, but also on the accumulated interest from previous periods of the loan or deposit.

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8
Q

Define Simple Interest

A

Interest that is paid only on the principal of a loan and not on any interest from previous periods of the loan or deposit.

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