Topic 1: Understand the features of legal tender

Question 1

What is money?

Answer 1

Money can be defined as anything that is generally acceptable and as a means of exchange, which at the same time acts as a measure and a store of value.

Question 2

What does denominations mean?

Answer 2

Denominations means the different value of each note and coin.

Question 3

What 6 characteristics must money have?

Answer 3

• easy recognised by everyone
• accepted by people and shops
• easy to carry around
• available in different amounts
• always worth the same amount
• hardwearing

Question 4

What happens to coins when a monarch dies?

Answer 4

When a monarch does, the next king or queen is shown. Also, whatever direction the head of the last monarch was facing, the next monarch faces the opposite.

Question 5

How do we tell denominations of our banknotes?

Answer 5

We can tell the denominations of each of our banknotes by the images on them and by their size.

Question 6

What tells us/people that notes and coins have to be accepted?

Answer 6

The law because the law states that notes and coins have to be accepted.

Question 7

Why are coins deliberately made small?

Answer 7

Coins are deliberately made small because that makes them more convenient and also makes them easy to carry around.

Question 8

Why does money always have to be worth the small amount?

Answer 8

Money always has to be worth the same amount so that each unit of money is reasonably stable and it’s able to hold its value.

Question 9

Why do coins have to be hard wearing?

Answer 9

Coins have to be hard wearing because they change hands thousands of times. If coins weren’t hard wearing then they would be easily destroyed and unable to use.

Question 10

What is the average life of a coin?

Answer 10

The Royal Mint says that the average life of a coin in 40 years.

Question 11

What happens if you damage a note?

Answer 11

If you damage a note, you can fill in a special form and if it can confirm that the pieces of paper are actually a proper note, the Bank of England will replace the note.

Question 12

What is the average life of a note?

Answer 12

The life of a note ranges from around 1 year for the £5 note to 5+ for the £50 note.

Question 13

What do note-sorting machines do?

Answer 13

Note-sorting machine separate those notes that are too dirty or damaged for further circulaton,

Question 14

What happens to notes when they are shredded.

Answer 14

When notes are shredded, the resultant material is then used as landfill or taken to an industrial incinerator for burning.

Question 15

What was the total value of all notes destroyed in 2011-12 according to the Bank of England?

Answer 15

£8.918 billion.

Question 16

What does legal tender mean?

Answer 16

Legal tender means that, by law, people must accept certain coins and banknotes in payment of a debt.

Question 17

In England, Wales, the Channel Islands and the Isle of Man, what notes are the legal tender for payment of any amount?

Answer 17

The £5, £10, £20 and £50.

Question 18

What is the legal tender for 50p?

Answer 18

50p - for any amount not exceeding £10

Question 19

What is the legal tender for 20p?

Answer 19

20p - for any amount not exceeding £10

Question 20

What is the legal tender for 10p?

Answer 20

10p - for any amount not exceeding £5

Question 21

What is the legal tender for 5p?

Answer 21

5p - for any amount not exceeding £5

Question 22

What is the legal tender for 2p?

Answer 22

2p - for any amount not exceeding 20p

Question 23

What is the legal tender for 1p?

Answer 23

1p - for any amount not exceeding 20p

Question 24

What is the difference between repaying a debt and paying for a service that you have not yet received?

Answer 24

The difference is, if you’re repaying a debt, the person whom you are paying has to accept the money in whatever denominations you offer, where as if you are paying for a service you have not yet received, the person whom you are paying does not have to accept payment in small denominations.

Question 25

What did the Forgery and Counterfeiting Act 1981 do?

Answer 25

The Forgery and Counterfeiting Act 1981 makes it a criminal offence for any person, without the prior consent of writing of the Bank of England, to reproduce any Bank of England banknote or any part of a Bank of England banknote.

Question 26

What happens if new notes are to be introduced?

Answer 26

If new notes are to be introduced, both the old and new notes are in the circulation together while the old ones are gradually withdrawn through the note destruction system.

Question 27

What 3 banks in Scotland are permitted to print and issue their own banknotes?

Answer 27

• Bank of Scotland
• Royal Bank of Scotland
• Clydesdale Bank

Question 28

What 4 banks in Northern Ireland are permitted to print and issue their own banknotes?

Answer 28

• Bank of Ireland
• First Trust Bank
• Northern Bank
• Ulster Bank

Question 29

What 2 series of banknotes foes the Bank of Scotland have in circulation?

Answer 29

• the “Bridges” series

- the “Tercentenary” series

Question 30

What do the Royal Bank of Scotland banknotes feature on their front and back?

Answer 30

On the front of the Royal Bank of Scotland features Lord Ilay and on the back features a different Scottish castle.

Question 31

What are the 2 series for the Clydesdale Bank?

Answer 31

• the “World Heritage” series

- the “Famous Scots” series

Question 32

Are Northern Ireland’s banknotes often accepted in England and Wales?

Answer 32

No, not without some explanation.

Question 33

Name the 7 security features that appear on English banknotes.

Answer 33

• the paper and print is raised
• there is metallic thread
• there is a water mark
• print quality is not blurred
• there is micro-lettering
• there is a ultra-violet feature
• there is a hologram

Question 34

What extra security feature do £20 and £50 notes have?

Answer 34

There is a see-through register where coloured irregular shapes are print on the front and back that combine for form the “£” symbol.