A1-4

Question 1

What is money? *(function of money)

Answer 1

A method of exchange, typically in the form of any combination of coins and banknotes.

Question 2

How does managing money enable a business to be successful?

Answer 2

Doing This allows the business to make a profit and not get into debt.

Question 3

What Is Inflation?

Answer 3

General increase in prices and fall in the purchasing value of Money. Inflation is basically a rise in prices. Inflation leads to a decline in the value of Money.

Question 4

What Is A Unit Of Account?

Answer 4

this means a value can be given to goods and services

Question 5

What Is Means Of Exchange?

Answer 5

allows people to buy and sell goods (to trade with each other)

Question 6

What Is Store Of Value?

Answer 6

it can be saved and spent in the future

Question 7

What Is Legal Tender?

Answer 7

it is a recognised form of payment accepted for goods or services

Question 8

What Is Personal Attitudes?

Answer 8

to risk and reward, saving or spending, borrowing (credit and debt)

Question 9

What Are Life Stages?

Answer 9

childhood to adulthood, changing financial needs and attitudes

Question 10

What Is Culture In Regards To The Role Of Money?

Answer 10

religion, tradition, ethnic background affects saving and borrowing

Question 11

What Culture Do Not Think Money Is For Saving?

Answer 11

Islamic, they think money is only a means of exchange and do not save it, or like to earn interest on it

Question 12

What Are Life Events?

Answer 12

university costs, marriage, property, illness, financial losses

Question 13

What Are External Influences?

Answer 13

economic change, jobs wages, taxes, benefits affect spending and saving

Question 14

What Are Interest Rates?

Answer 14

Low rates encourage borrowing and spending, high rates encourage saving.

Question 15

What Are The Financial Needs For A Child?

Answer 15

Few Financial Needs: high reliance on parents for day to day expenditure and clothes and toys.

Question 16

Complications Of Needs For A Child?

Answer 16

Parents Pay - Family Gifts, maybe open a savings account for the child, so the child can then use the money at a later stage of their life

Question 17

Adolescence Financial Needs?

Answer 17

Medium Financial Needs: College Fees, University Fees, Car Insurance, Transport Fees, Food Fees, Car Financial Needs, Technology, Driving Lessons, Direct Debit Phone Bill, Credit Card/Debit Card

Question 18

Adolescence Implications

Answer 18

Uni Fees can be really expensive, student Loan means that the student would have to work hard to keep out of debt, Interest Rate for the student loan goes up, then you have to pay more monthly instalments which could be hard to meet for a student

Question 19

Young Adult Financial Needs?

Answer 19

Rent/ House Mortgage, Going Out Fees, the personality of the person after graduating, this means that they might be incentive to spend and not save

Question 20

The financial needs of an Adult are…

Answer 20

1. They need to supply for their family needs and put a mortgage on a house/property

Question 21

JUST REMEMBER THIS TABLE!

Answer 21

JUST REMEMBER THIS TABLE!

Question 22

Name The External Factors That Affect Money

Answer 22

Economic cycle – taxation, consumer confidence, unemployment, government and elections, bank of England. Also interest rates.

Question 23

Name 11 Principles To Consider When Planning Expenditure (Only learn a few)

Answer 23

Avoid getting into debt – interest payments add to the amount borrowed

Control costs – limit spending on unnecessary items, set a budget

Avoid legal action, repossession of your goods or valuables

Remain solvent – be able to pay for day to day costs and repay debts

Keep a good credit rating – be able to borrow Money in future (credit scores affect availability of credit and cost of it)

Avoid bankruptcy – a situation when debts cannot be repaid – (more in B4)

Manage Money to fund purchases – be able to buy for cash rather than borrowing

Generate income and savings – to provide a safety net against illness or job loss

Set financial targets and goals – to purchase a car or house

Provide insurance against loss or illness – insure your valuables, holidays, etc

Counteract the effects of inflation – buy items before their prices rise.

Question 24

Name 12 Ways To Pay For Goods and Services?

Answer 24

Cash

Debit card

Credit card

Cheque

Electronic transfer

Direct debit

Standing order

Pre-paid cards

Contactless cards

Charge cards

Store cards

Mobile banking

Question 25

Cash What Is It Advantage Disadvantage

Answer 25

notes and coins in a wide range of denominations Widely accepted, people trust cash, easy to control spending (budgeting) Can be lost or stolen, counterfeit (fake), cannot use online or for very large purchases

Question 26

Debit Card What Is It Advantage Disadvantage

Answer 26

card issued by your bank, money spent on goods is deducted from your current account Secure, widely accepted, no need to carry cash, use for online purchases, can withdraw cash at cashpoint not for small purchases, deducted quickly, you may overspend

Question 27

Credit Card What Is It Advantage Disadvantage

Answer 27

issued by financial institutions, allows customers to delay payment one month’s interest-free credit (buy now, pay later), widely accepted, use online or in-store, some protection against fraud interest is charged after 1 month, easy to get into debt, credit limit, charges for cash withdrawals

Question 28

Cheque What Is It Advantage Disadvantage

Answer 28

A paper transaction giving a bank permission to transfer payment from your account to another person’s bank account. less risk than cash, useful for postal transactions, written for exact amount (no need to give change) expensive if it the bank refuses it (bounces), old fashioned, it takes a few days for the money to go out of your account, you could overspend, errors writing cheque

Question 29

Electronic Transfer What Is It Advantage Disadvantage

Answer 29

payment is transferred directly from one bank account to another record of payment, instant payment, can be done remotely e.g. by mobile app Need to be carefully set up to ensure the transfer goes to the right place, not suitable for face to face

Question 30

Direct Debit What Is It Advantage Disadvantage

Answer 30

permission given to the bank to make regular payments to a third party upon request (eg. to pay your electric bill monthly) ensures regular payments are not missed, can change the amount (variable), easy to set up amount taken can vary making budgeting difficult, taken automatically (amount taken may be wrong), needs to be set-up again if changing your bank

Question 31

Standing Order What Is It Advantage Disadvantges

Answer 31

a fixed amount of money is taken out of your bank account on a specified date (normally monthly) easier to plan and budget for it, ensures regular payments are not missed it could make you overdrawn, it does not stop until you cancel it.

Question 32

Pre Paid Cards What Is It Advantage Disadvantage

Answer 32

you upload money to the card and spending reduces the balance can set spending limit, can top-up, loss is limited if stolen, use online initial fee, can be difficult to monitor balance, can be used by others without permission

Question 33

Contactless Card What Is It Advantage Disadvantage

Answer 33

payment made by swiping a contactless terminal convenient, quick and easy only for small purchases (less than £30), possible fraud

Question 34

Charge Cards What Is It Advantage Disadvantage

Answer 34

issued by financial institutions, buy now pay later. short term interest free period, less risk of building up debts, less need to carry cash. you must pay the balance in full each month, annual fixed fees, you need a certain level of income (wages)

Question 35

Charge Card What Is It Advantage Disadvantage

Answer 35

issued by a retail outlet (eg. Topshop) buy now, pay later customers can delay paying for goods, extras such as personal discounts or offers usually included, interest-free period interest rate is very high after the free period, can only be used in that specific shop, easy to overspend and get into serious debt

Question 36

Mobile Banking What Is It Advantage Disadvantage

Answer 36

use a tablet or smartphone to manage your bank accounts convenient and secure, make payments and transfer amounts between your accounts. not as useful as internet banking, need to install an app, screen size and speed of device may affect the service.

Question 37

Banker’s Automated Clearing Services (BACS) What Is It Advantage Disadvantage

Answer 37

Payments transferred from one account to another (eg. Salary from your employer’s bank account to your bank account) BACS takes 3 days, FPS takes 2 hours, secure, usually no fee a limit on the max amount, FPS not offered by all banks

Question 38

Clearing House Automated Payment Systems (CHAPS) What Is It Advantage Disadvantage

Answer 38

Electronic bank-to-bank technology that enables payments to be made unlimited amount, faster than BACS (same day if done before 2pm) fixed charge per transaction, payments in Sterling £ only. They are unconditional, and once made, cannot be recalled