Unit 3 - 45-60

Question 1

What are the functions of money?

Answer 1

Unit of account, means of exchange, store of value, legal tender.

Question 2

What are the roles of money?

Answer 2

Personal attitudes, life stages, culture, life events, external influences, interest rates

Question 3

Benefits of planning

Answer 3

Good credit rating, earn interest, available to pay for unexpected expenses.

Question 4

Risks of not planning

Answer 4

Debt, poor credit rating

Question 5

Benefit/negative of Cash

Answer 5

Accepted in most places/can be stolen, cannot be used for online purchases

Question 6

Difference between debit and credit card

Answer 6

Debit=payment taken directly from cardholders bank account.

Credit=paid for directly by card issuer

Question 7

What is direct debit?

Answer 7

An instruction to a bank authorising a third party to collect varying amounts of money from persons bank account.

Question 8

What is Standing order

Answer 8

Instruction to bank from account holder to make regular set payments to person or organisation.

Question 9

Difference between BACS and CHAPS

Answer 9

BACS=no fee, takes 3 days to transfer payments.

CHAPS=fee charged, guaranteed same-day transfer

Question 10

What are the 4 types of current account?

Answer 10

Standard, packaged premium, student, basic

Question 11

Overdraft

Answer 11

Short-term loan, arrange with bank to borrow money up to an agreed amount, high interest on money borrowed

Question 12

Personal loan

Answer 12

Used to buy expensive items, pay back in monthly instalments at fixed interest rate.

Question 13

Hire purchase

Answer 13

Used to buy a car, put down deposit and pay monthly instalments, during payment period you hire the car and own it once all instalments are paid.

Question 14

Mortgage

Answer 14

Loan taken out to buy a property, monthly instalments spread cost over long period

Question 15

Payday loan

Answer 15

Short-term loan usually for small amounts, fee is charged, expensive method of borrowing

Question 16

What are the 2 types of ISA?

Answer 16

Cash ISA=savings account where interest is paid.

Stocks and shares=more risky, funds invested in shares or bonds, potential for either loss or gain

Question 17

Premium bonds

Answer 17

No interest payed, given chance to win a tax-free cash prize every month

Question 18

Bonds and gilts

Answer 18

Pay investors regular interest over a set period of time, value can fall

Question 19

Shares

Answer 19

Give investors part ownership of a company, shareholders receive payments based on the performance of the business

Question 20

Pensions

Answer 20

Long-term savings schemes designed to help you save for retirement

Question 21

Name the types of insurance

Answer 21

Car, home and contents, life insurance+assurance, travel, pet, health

Question 22

Financial institutions

Answer 22

Banks, building societies, credit unions, insurance companies, pawnbrokers, pension companies

Question 23

Types of customer communication

Answer 23

Bank branch, telephone, online, postal, mobile

Question 24

Consumer protection

Answer 24

FCA(financial conduct authority), FOS(financial ombudsman service)
FSCS(financial services compensation scheme)

Question 25

Citizens advice

Answer 25

Charitable organisation - free, confidential, impartial advice on financial issues

Question 26

Independent financial advisers(IFAs)

Answer 26

Professional individuals provide financial guidance, charge fee for their services

Question 27

Price comparison websites

Answer 27

Websites that compare features and prices of different types of financial products, requires computer with internet access

Question 28

Debt counsellors

Answer 28

Financial advice to individuals struggling with debt, personalised advice, may charge a fee

Question 29

Money advice service

Answer 29

Government agency providing free and impartial money advice to improve individuals finances

Question 30

What are the purposes of accounting?

Answer 30

Recording transactions, management of business, compliance, measuring performance, control

Question 31

What is capital income?

Answer 31

Money used to set up a business e.g.

Loan, mortgage, shares, owners capital

Question 32

What is revenue income?

Answer 32

Income recieved by the business on sales of its goods or services e.g.
Cash sales, credit sales, rent recieved, interest recieved