Learning Aim A: Personal & Business Finance

Question 1

This refers to anything that allows the value of something to be expressed in an understandable way, and in a way that allows the value of items to be compared.

Answer 1

Unit of Account

Question 2

Money that has a legal sanction by the government behind it is called legal tender means money under the law of land

Answer 2

Legal Tender

Question 3

The importance of money may change depending on certain life events. For instance when you first buy a home, the role money plays in your life may now be more important.

Answer 3

Role of Money - Life Events

Question 4

The state of the economy and the jobs market may mean that money plays and bigger or less valuable part of your life. These external influences are out of your control but still impact the role money plays.

Answer 4

Role of money - external influences

Question 5

Needs of people in their old age? Use of pensions and any savings. People in this age bracket may downgrade to a smaller home.

Answer 5

Life Stages

Question 6

Knowing what money is coming in and going out is important as it ensures you are not overspending and therefore avoids debt.

Answer 6

Financial Planning - Avoiding Debt

Question 7

By planning expenditure you are aware of your expenses and can control costs by making adjustments to your finances

Answer 7

Financial Planning - Controlling Costs

Question 8

A consequence of not planning expenditure is that you could overstretch your finances and become unable to pay bills. This could then lead to legal action to reclaim the cost of unpaid items or repossession of an item eg house.

Answer 8

Financial planning - avoiding repossession

Question 9

A written order to a bank to pay a stated amount from an individuals account to another.

Answer 9

Cheque

Question 10

This is an instruction from you to your bank or building society. It authorises the organisation you want to pay to collect varying amounts from your account

Answer 10

Direct Debt

Question 11

This is a way of setting up a regular, fixed payment from your bank account.

Answer 11

Standing Order

Question 12

Allows money to be transferred by touching the card on a contactless terminal.

Answer 12

Contactless Payment

Question 13

A card used to make purchases now and pay for them later.

Answer 13

Credit Card

Question 14

This is a type of bank account that keeps your money secure and helps you manage your finances.

Answer 14

Current Account

Question 15

This account has a monthly fee in return for additional benefits such as breakdown cover, cashback on purchases, home insurance and payment protection. These may not always be value for money.

Answer 15

Premium Bank Account

Question 16

An account designed to benefit students. Especially useful for students attending university as they provide interest free overdrafts, rail cards and discounts off eating out.

Answer 16

Student Bank Account

Question 17

This current account is mainly used by people who have a poor credit rating and struggle to open a standard account. It has limited facilities and no overdraft available.

Answer 17

Basic Bank Account

Question 18

Allows you to borrow money for a specific purpose such as improving your home or buying a car. They are a longer term form of borrowing for higher priced items

Answer 18

Personal Loan

Question 19

A hire purchase is an arrangement where a customer agrees to a contract to buy an asset by paying off the amount in regular instalments.

Answer 19

Hire Purchase

Question 20

This is a long term loan for example paid back over 30 years. The loan is secured against an asset such as a house.

Answer 20

Mortgage

Question 21

A short term source of finance that is available over a very short period of time with very high amounts of interest.

Answer 21

Payday Loan

Question 22

The main difference between an ISA and any other savings account is that it offers tax-free interest payments,

Answer 22

ISA (Individual Savings Account)

Question 23

This is an investment product issued by National Savings and Investment (NS&I).

Answer 23

Premium Bonds

Question 24

Money allows goods and services to be traded without the need for a barter system. Barter systems rely on there being a double coincidence of wants between the two people involved in an exchange.

Answer 24

Means Of Exchange

Question 25

This can refer to any asset whose “value” can be used now or used in the future i.e. its value can be retrieved at a later date. This means that people can save now to fund spending at a later date.

Answer 25

Store of Value

Question 26

These are fixed term securities where the lender lends money to companies and governments in return for interest payments.

Answer 26

Bonds and Gilts

Question 27

Part ownership of a business. Shareholders receive a dividend from company profits.

Answer 27

Shares

Question 28

Long term savings plan were individuals make regular contributions. Savings are made for retirement.

Answer 28

Pensions

Question 29

Is a legal requirement in the UK and covers you in case of an accident, fire or theft depending on the level of cover purchased.

Answer 29

Car Insurance

Question 30

Buildings insurance covers the physical building itself and in case of fire or structural damage. Contents insurance covers item within the house such as electricals, carpets and furniture. There is also the option to cover item when they are not at home.

Answer 30

Home and Contents Insurance

Question 31

A policy that pays a lump sum upon death. Life insurance is usually required when purchasing a home to ensure the mortgage is covered if the homeowner dies.

Answer 31

Life Insurance

Question 32

Protects you while abroad. Typically covers illness, holiday and flight cancellations, theft and emergencies.

Answer 32

Travel Insurance

Question 33

Protects the owners of pets from expenses associated with looking after a pet such as illness or injury of the animal.

Answer 33

Per Insurance

Question 34

Covers individuals, families and employees via a payment plan that may include going to the dentist or opticians.

Answer 34

Health Insurance

Question 35

Degree of uncertainty of return on an asset; in business, the likelihood of loss or reduced profit.

Answer 35

Risk

Question 36

The benefit or return gained from an investment.

Answer 36

Rewards

Question 37

An account where interest is paid on the balance

Answer 37

Deposit/Savings Account

Question 38

Occurs when money is withdrawn from a bank account and the available balance goes below zero

Answer 38

Overdraft

Question 39

A system that allows the transfer of payments directly from one bank account to another. Payments are made on the day you make them.

Answer 39

Clearing house automated payment system (CHAPS)

Question 40

A system that allows the transfer of payments directly from one bank account to another

Answer 40

Bankers' Automated Clearing Service (BACS)

Question 41

A type of banking whereby transactions are made via a smartphone or tablet app. The account holder can transfer money between accounts, pay bills, deposit checks, and monitor account activity.

Answer 41

Mobile Banking

Question 42

A credit card that can be used only in one store chain of stores

Answer 42

Store Cards

Question 43

Like a credit card, when you buy now and pay for something later.

Answer 43

Change Cards

Question 44

Money is uploaded onto a card with transactions then being withdrawn to reduce the balance

Answer 44

Pre-paid Cards

Question 45

The transfer of funds from one account to another via the internet or telephone

Answer 45

Electronic transfer

Question 46

A general and progressive increase in prices

Answer 46

Inflation

Question 47

Protection against possible financial loss

Answer 47

Insurance

Question 48

Targets that an individual sets in regard to saving or spending.

Answer 48

Financial Targets and Goals

Question 49

Ability to add to your income or savings

Answer 49

Income and Savings generation

Question 50

How a person handles money by spending and saving

Answer 50

Manage Money

Question 51

A legal process to get out of debt when you can no longer make all your required payments

Answer 51

Bankruptcy

Question 52

A measure of a person's ability and willingness to make credit payments on time

Answer 52

Credit Rating

Question 53

An ability to pay debts

Answer 53

Solvent

Question 54

The use of the courts as a means of asserting rights and interests

Answer 54

Legal Action

Question 55

Taking away property due to failure to make loan or credit payments

Answer 55

Repossession

Question 56

Money that is owed to an individual or financial institution.

Answer 56

Debt

Question 57

The cost of borrowing money

Answer 57

Interest Rates

Question 58

The enduring behaviors, ideas, attitudes, values, and traditions shared by a group of people and transmitted from one generation to the next

Answer 58

Culture

Question 59

Individuals that will vary in their attitudes to risk and reward as well as savings and borrowing.

Answer 59

Personal Attitudes