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Business Studies A-Level 🌙 > Learning Aim A > Flashcards

Learning Aim A 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

Allows the use of money to place value on goods and services

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3
Q

What is Means Of Exchange ?

A

Money is used to sell, buy or trade goods and services.

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4
Q

What is Store Of Value ?

A

Money has value and can be stored, e.g. in banks.

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5
Q

What is Legal Tender ?

A

Money is the legal means to pay for goods and services. It is the national currency of a country.

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6
Q

Role Of Money (6) ?

A

Personal attitudes

Life stages

Culture

Life events

External influences

Interest rates

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7
Q

Why plan expenditure?

A
  • Control costs
  • Avoid debt
  • Set financial targets and goals
  • Avoid bankruptcy
  • Counter the effects of inflation
  • Generate income and savings
  • Maintain good credit rating
  • Remain solvent
  • Avoid legal action
  • Insurance against loss or illness
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8
Q

Different ways to pay ?

A

Cash
Debit Card
Credit Card
Cheque
Electronic transfer
Direct debit
Standing order
Pre-paid card
Contactless card
Charge card
Store card
Mobile banking
BACS
CHAPS

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9
Q

Advantages of paying with Cash?

A

Most widely accepted form of exchange

Physical not virtual

Makes budgeting easier

Consumers feel more confident when using

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10
Q

Disadvantages of paying with Cash?

A

Can be lost or stolen

Threat of counterfeit

Only really appropriate on purchases up to a certain amount

Cannot be used online

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11
Q

Advantages of paying with Debit Card?

A

No need to carry cash

Secure method of payment with low risk of theft

Widely accepted

Offers degree of protection on purchases

Suitable for online transactions

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12
Q

Disadvantages of paying with Debit card ?

A

Short time lapse between making transaction and money being withdrawn from customers account

May result in overspending

Not accepted or appropriate for small transactions

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13
Q

Advantages of paying with Credit card ?

A

Allows period of credit, interest free

Most cards widely accepted

Loyalty schemes often offered

Offers degree of protection on purchases

Suitable for online transactions

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14
Q

Disadvantages of paying with Credit card ?

A

Interest is charged on balances not paid off within one month

Can encourage overspending and may lead to debt

Interest charged on cash withdrawals

Limit set on amount of credit allowed

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15
Q

Advantages of paying with a Cheque ?

A

Low risk form of payment as the cheque can only be cashed by named payee

Widely accepted for face-to-face and postal transactions

No need to provide change as can be written for exact amount

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16
Q

Disadvantages of paying with Cheque?

A

Expensive for consumer if bank refuses to clear cheque

Time delay between writing and receiving cheque may cause overdraft

Old fashioned

Easy to make errors when writing, creating problems when cashing out

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17
Q

Advantages of paying through Electronic transfer ?

A

Almost instantaneous

Provides record of payment

No additional costs incurred

Easy to use for one-off and more frequent transactions

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18
Q

Disadvantages of paying through Electronic transfer ?

A

Risk of loss is the transfer is incorrectly set up

Not appropriate for face-to-face transactions

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19
Q

Advantages of paying with Direct debit ?

A

Easy way to make regular payments E.g. utility bills

Amount paid can vary to ensure the payment matches the required amount

Quick and easy to set up

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20
Q

Disadvantages of paying with Direct debit ?

A

If mistakes are made, it’s payees responsibility to claim back lost money

The payer determines amount paid each time therefore making budgeting and planning harder for payee

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21
Q

Advantages of paying through Standing order ?

A

Same amount paid each time

Easy to set up and cancel

No need to remember to make regular, standard payments

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22
Q

Disadvantages of paying through Standing order ?

A

Payments taken regardless of consumers balance, potentially leading to overdraft

Payments will continue until cancelled

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23
Q

Advantages of paying with a Pre-paid card ?

A

Can set budget in advance

If lost or stolen, the loss is limited to the remaining balance

Effective way of controlling amount spent by E.g. children for school etc.

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24
Q

Disadvantages of paying with a Pre-paid card ?

A

No protection if lost

May require initial fee to set up or purchase card

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25
Advantages of paying with a Contactless card ?
Gaining in popularity Secure method of making payments
26
Disadvantages of paying with a Contactless card ?
Often only accepted for relatively small transactions Still not widely accepted as seen as new technology If lost or stolen and card hasn’t been cancelled, it can still be used
27
Advantages of paying with a Charge card ?
Reduces risk of running up debts Allows a short period of credit Avoids need to carry cash Often offers additional perks
28
Disadvantages of paying with a Charge card ?
Must be paid in full amount each month Often an annual fixed fee is applied
29
Advantages of paying with a Store card ?
Allows for short period of credit that is interest free Offer loyalty schemes, discounts and special promotions or privileges
30
Disadvantages of paying with a Store card ?
Only accepted in issuing store or linked associations Interest is paid on outstanding balances May encourage overspending- resulting in debt
31
Advantages of paying through Mobile Banking ?
Convenient, can be used anytime anywhere Secure method of payment
32
Disadvantages of paying through Mobile banking ?
Features are limited and hence mobile banking doesn’t offer all functionality of online banking
33
Advantages of paying through BACS ?
Faster payment allows almost instant transfers, guaranteed within 2 hours Can be accessed in number of ways E.g. in branch, over phone and online No additional costs
34
Disadvantages of paying through BACS ?
Faster payment isn’t offered by all banks and branches- therefore leading to default BACS with up to three days transfer time Limit is set on amount that can be transferred at a given time
35
Advantages of paying through CHAPS ?
Transfers can be made the same day assuming instructions are received prior to a set time e.g. 2pm at Barclays No limit to how much can be transferred at any given time
36
Disadvantages of paying through CHAPS ?
Usually a fixed charge per transaction regardless of amount transferred
37
4 types of Current accounts ?
Standard Packaged premium Basic Student
38
What is a Standard current account ?
Normal account offered to customers with a reasonable credit rating. Includes standard features such as ability to pay and withdraw money, cheque book, debit card, interest payments on positive balances and pre-agreed overdraft limit.
39
What is a Packaged premium current account ?
Account offers additional features to a standard account such as, car and house insurance, credit card protection, breakdown cover and cash back on certain transactions.
40
What is a Basic current account?
Account offers limited features, designed for those who may find it difficult to open a bank account due to poor credit rating. Will not offer overdraft facility and won’t pay interest or positive balances.
41
What is a Student Current account ?
Account designed specifically to meet the needs of learners. Include agreed overdraft limit and incentives to join bank E.g. free rail cards or cash.
42
Advantages of Standard Current account ?
No charges on credit balances Offers holder wide range of facilities E.g. cheque book, debit/cash card and possible overdraft facility Convenient for receiving regular payments E.g. wages and making regular withdrawals
43
Disadvantages of Standard current account ?
Potential high charges on the use of an overdraft facility Standard features online e.g. no additional perks
44
Advantages of a Packaged premium account ?
-no charges on credit balances -offers wide range of facilities E.g. cheque book, debit/cash card and possible overdraft facility -Convenient for regular payments E.g. wages and making withdrawals - offers additional perks at packaged price, cheaper than acquiring them individually
45
Disadvantages of a packaged Premium account ?
-additional monthly charge is frequently applied -package offered may not offer value for money or meet the needs of the individual account holder
46
Advantages of a basic account ?
- available to customers with low credit rating -offers easy first step for individuals to gain access to basic banking facilities E.g. ability to pay in and withdraw cash
47
Disadvantages of a basic account ?
- limited facilities E.g. no debit card or overdraft facility
48
Advantages of a student account ?
-course fees and student loans can be handled easily -bonuses offered are designed to meet the needs of the learners e.g. discounts on travel or small lump sum of cash payment
49
Disadvantages of a student account ?
-overdraft facilities could encourage overspending -charges for overspending are high -limited facilities
50
Different types of borrowing (6) ?
Overdraft Personal loan Hire purchase Mortgage Credit card Payday loan
51
Advantages of an overdraft ?
Interest is charged only on the amount outstanding Overdraft facility can be pre-arranged and only used if needed Provides a short term solution to cash flow problems
52
Disadvantages of a overdraft ?
When used, interest charges can be high Penalty charges for going over a prearranged limit are often high Not the cheapest form of borrowing May encourage overspending
53
Advantages of personal loans ?
Regular pre agreed payments make planning and budgeting easier Usually only issued to individuals who can prove their ability to make the repayments Useful when looking to purchase a specific item of medium to high value E.g. a car or home improvement
54
Disadvantages of a personal loan ?
May have to be secured against and asset meaning of payments aren’t made the asset can be taken away Not really suitable for short term loans
55
Advantages of hire purchase ?
Spreads the cost of an expensive item over a period of time Credit is secured against a specific item Often allows customer to afford something now that they couldn’t otherwise afford e.g. 4 years interest free on furniture
56
Disadvantages of hire purchase ?
Interest charges may be higher than other traditional loans Ownership of an asset may be legally kept by seller until final payment is made Agreements can be manipulated to make a purchase seem appealing
57
Advantages of mortgages ?
Allows customer to spread cost or expensive items over long period of time E.g. purchase of a house is often spread over 25 years Interest rates can sometimes be fixed or tracked against a standard rate of interest, reducing the risk of fluctuations
58
Disadvantages of mortgages ?
Interest payments can vary- this therefore seriously affects the borrowers ability to repay or meet other expenses Failure to meet repayments may lead to loss of a home and seriously affect an individual’s future credit rating Penalties may apply to early repayment
59
Advantages of credit cards as form of borrowing ?
Card holder can pay above minimum rate if they wish therefore speeding up the rate or repayment and reduce interest incurred Can be used for items of multiple sizes and value, to a limit without the need to secure against and asset Provides some protection on purchases
60
Disadvantages of borrowing through credit cards ?
Can encourage overspending- leading to debt Interest rates are often higher than on a personal loan
61
Advantages of a payday loan ?
Help solve immediate short term cash flow problems Relatively easy to secure
62
Disadvantages of a pay day loan ?
Interest rates are very high and the amount to be repaid can quickly spiral out of control
63
Different types of saving and investment (6) ?
Individual savings accounts (ISA’s) Deposit and savings accounts Premium bonds Bonds and gilts Shares Pensions
64
Advantages of individuals savings accounts (ISAs) ?
Tax is not charged on interest earned allowing the saver to keep all of the rewards for saving Interest rates are sometimes slightly higher than in alternative savings accounts
65
Disadvantages of individuals savings accounts (ISAs) ?
Notice is often required to make withdrawals and a limit may be set on the amount of withdrawals made If more withdrawals are made than set out in agreement then a penalty may cancel out tax savings Limit set on annual amount that can be placed in an ISA
66
Advantages of deposit and savings accounts ?
Interest is earned on positive balances Accounts sometimes require regular deposits of a set amount - forcing the saver to follow a savings plan
67
Disadvantages of deposit and savings account ?
Interest earned is taxed Percentage range of interest paid on savings is likely to be lower than interest on borrowing therefore benefits of savings are lost if the customer is borrowing at the same time
68
Advantages of premium bonds ?
Chance of winning more than could be earned in interest Can be easily withdrawn with no loss or penalty
69
Disadvantages of premium bonds ?
No guaranteed return on investment Maximum amount reviewed annually by government Amount invested loses value due to inflation
70
Advantages of bonds and gilts ?
Regular fixed returns Spreads risk across range of markets
71
Disadvantages of bonds and gilts ?
Risk of losing value on investment of bond or gilt value falls Interest payments may not be recieved if issuer is unable to make payments
72
Advantages of shares ?
Share prices fluctuate offering potential high reward Shareholders returns can include dividend payments and increase is share value As part owners, additional benefits may include discounts and special offers For some, shared ownership is more than just saving, it may create interest, it’s a pastime
73
Disadvantages of shares ?
Share prices fluctuate- creating high risk No guarantee on any reward or return as all of an investment can be lost
74
Advantages of pensions ?
Encourages people to save throughout their working life for retirement Depending upon policy, savings may be boosted by employers contributions Regular payments deducted therefore they are tied into making regular contributions- helping save more
75
Disadvantages of pensions ?
Movement between jobs may cause policy to stop and another start. Therefore potentially reducing overall outcome of savings Final outcome is hard to predict If compulsory, payments are deducted, potentially affecting short term living standards
76
Risks involved with saving money ?
Low risk as money is saved and guaranteed to be available in future Inflation may reduce the spending power of money saved
77
Rewards of saving money ?
Interest payments Financial security Peace of mind
78
Risks of investments ?
May go wrong and all or some of the value may be lost No guarantee on return
79
Rewards of investment?
If successful, potential for high financial return Can be exciting. People will invest in hope of high returns
80
Different types of insurance products (6) ?
Car Home and contents Life assurance and insurance Travel Pet Health
81
Advantages of car insurance ?
Meets legal requirements Protects self against theft of damage Protects against damage caused to third party
82
Disadvantages of car insurance?
Premiums can be high depending on assessed level of risk E.g. expensive for young drivers Potential excess to be paid E.g. first £500 of damage is still responsibility of car owner
83
Advantages of home and contents insurance ?
Protects against damage which may otherwise be too expensive to repair, resulting in loss of home Contents are protected both when inside and outside of home
84
Disadvantages of home and contents insurance ?
Premiums are an additional expense to home ownership Some items cannot be replaced due to value E.g. a painting or inherited piece or jewellery
85
Advantages of life assurance and insurance ?
Provides peace of mind to family following bereavement of home owner Helps family deal with financial aspect of the death
86
Disadvantages of life assurance and insurance ?
If policy holder doesn’t die within the period of life insurance, then no payment is made
87
Advantages of travel insurance ?
Provides protection for personal belongings while away from home Covers medical costs on holiday Protects against cancellation and sometimes delays
88
Disadvantages of travel insurance ?
Person who has lost the items is likely to have to pay upfront to replace and cover medical costs then reclaim later Additional cost when travelling abroad
89
Advantages of pet insurance?
Avoids expensive vet fees If vet fees are too high, pet insurance can help prevent the pet being put down
90
Disadvantages of pet insurance ?
Additional Monthly expense to protect against the unexpected
91
Advantages of health insurance?
Some compensation is provided when I’ll which can reduce the financial burden and stress, allowing patient to concentrate on recovery If used for private care, often results in quicker treatment and better facilities
92
Disadvantages of health insurance?
Pay for something you hope you won’t use Premiums can be expensive depending on the degree of cover wanted Will not cover pre-known conditions

Business Studies A-Level 🌙 (5 decks)

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