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Business BTEC > Unit 3 (Personal and Business Finance) > Flashcards

Unit 3 (Personal and Business Finance) Flashcards

1
Q

What are the 4 functions of money

A
  • Unit of Account
  • Means of Exchange
  • Store of Value
  • Legal Tender
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2
Q

What is Unit of Account

A

Money serves as the common bases of comparisons that people use to present price and record debts

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3
Q

What is Mean of Exchange

A

Where we uses notes and coins rather than barter as a medium of exchange

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4
Q

What problems does money as a medium of exchange avoid

A

Avoids the problems of barter such as double coincidence of wants

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5
Q

What is a double coincidence of wants

A

A situation where both parties hold an item needed by the other to fulfill their demand.

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6
Q

What is a store of value

A

That money holds a value

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7
Q

What is Legal Tender

A

That money is accepted to buy goods and services

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8
Q

What does legal tender enable?

A

As money is an accepted medium of exchange,it enables credit to be offered so payment can take place at a future date

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9
Q

What are factors that affect the role of money

A
  • Personal attitudes towards money
  • Culture (including religious and ethical beliefs)
  • Life Events
  • External Influences
  • Interest Rates
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10
Q

What is a credit limit?

A

The maximum amount of money that can be borrowed

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11
Q

What is APR?

A

Annual Percentage Rates which is the cost paid per year to borrow money expressed as a percentage

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12
Q

What is interest?

A

The additional fee that will need to be paid on top of any money borrowed via credit card

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13
Q

What is a transfer fee?

A

This is the amount of interest paid on top of the amount of money that is transferred to another credit card

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14
Q

What is AER?

A

Annual Equivalent Rate, This is the interest which you will be paid by the bank by saving

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15
Q

What is a current account?

A

A current account is a type of bank account most people use for day-to-day personal finances

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16
Q

Types of current account

A
  • Standard
  • Basic
  • Premium
  • Student
17
Q

Advantages of a standard account

A
  • Widely Available
  • Overdraft facility
  • Range of Services
18
Q

Disadvantages of a standard account

A
  • Limited additional benefits
  • Charges on overdraft
  • Late fees for overdue payments
19
Q

Advantages of a premium account

A
  • Range of services
  • Additional benefits
  • Ease of controlling finances
20
Q

Disadvantages of a premium account

A
  • Charges additional fees
  • Generic rather than tailored to the individual so some of the added benefits may be useless
21
Q

Advantages of a basic account

A
22
Q

Disadvantages of a basic account

A
23
Q

Advantages of a student account

A
24
Q

Disadvantages of a student account

A
25
Q

Types of car purchase option

A
  • Pay outright
  • Car Finance
  • Part exchange
26
Q

Types of car payment plans

A
  • Hire purchase
  • Payment control plan
27
Q

What is a hire purchase?

A

A monthly payment plan with a deposit which after the last installment of the payment, the car is yours

28
Q

What is a payment control plan?

A

A monthly payment plan (low cost) with a deposit which after the last installment of the payment, you can pay a balloon payment to buy the car

29
Q

What is car finance?

A

A loan to pay for PCP agreement over 36 to 60 months

30
Q

What is an overdraft?

A

An overdraft lets you borrow money through your current account by taking out more money than you have in the account

31
Q

Advantages of an overdraft

A
  • Only pay for the money borrowed
  • Quick and easy to arrange
  • No charge for paying off the overdraft
  • Only borrowed when required allowing for flexibility
32
Q

Disadvantages of an overdraft

A
  • The bank can call it in at anytime
33
Q

What is a personal loan?

A

A set amount of money provided to an individual or couple, for a specific purpose, to be repaid with interest, over a set period of time and may be secured against an asset

34
Q

What is a mortgage?

A

A long-term loan to fund the purchase of an expensive item that will hold value over a long time

35
Q

What is a payday loan?

A

A short-term loan, for a relatively small amount of money, to be repaid, upon receipt of the lenders next wage

36
Q

What is investment?

A

When money is put into an asset to generate profit

37
Q

What does an ISA stands

A

Individual Saving Account

Business BTEC (2 decks)

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