Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

personal and business finance > unit A > Flashcards

unit A Flashcards

(56 cards)

Start Studying
1
Q

What are the four functions of money?

A

-means of exchange
-store of value
-unit of account
-legal tender

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

definition of means of exchange?

A

buying, selling or trading can take place, function also avoids a barter system

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

definition of store of value?

A

money can be stored and retrieved at a later date without loosing value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

definition of unit of account?

A

money can be used to place a value of goods and services allowing comparisons to happen

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

definition of legal tender?

A

has the legal means to pay for goods and services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

why are the functions of money important?

A

very important because without means of exchange, you are unable to buy goods and services directly, instead there would be a barter system which is much less efficient.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

what are the roles of money?

A

-personal attitudes
-personal events
-life stages
-culture
-external influences + interest rates

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

definition of personal attitudes?

A

attitudes to risk and reward affect the role to money as some people may be willing to take big risks in the chance for rewards whereas others may be hesitant and follow low risk routes (saving)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

definition of life events?

A

moving house, wedding, and going to uni could increase the spending, being made redundant will cause individual to focus on budgeting.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

definition of life stages?

A

financial needs change at each stage, childhood, adolescence, young adult, middle aged and old age.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

definition of culture

A

religious beliefs can affect role of money for certain individuals such as some cultures may have tendency to save money than others.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what are the common principles of personal finance?

A

-avoid getting into to debt
-control costs
-counter the effects of inflation
-set financial targets and goals
-avoid bankruptcy
-maintain a good credit rating

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what are types of payment methods?

A

-cash
-credit card
-debit card
-store card
-charge card
-cheque
-electronic transfer
-contactless
-direct debit
-standing order
-prepaid cards
-mobile banking
-BACS
-CHAPS
-FPS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what are the advantages and disadvantages of cash

A

-widely accepted
-easy to budget and control spending

-risk of theft
-physical transactions only

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

what are the advantages and disadvantages of a credit card

A

make purchases but pay later (on credit) and can payback over a couple of months

-spreads cost in multiple repayments
-consumer is protected

-interest is charged
-encourages overspending

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

what are the advantages and disadvantages of a debit card

A

allows individual to make purchases with the money in their balance and is deducted directly

-can withdraw cash
-convenient for day to day use

-need to keep monitoring bank balance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

what are the advantages and disadvantages of a store card

A

allows a customer to buy on credit in a store or stores, minimum payment each month

-frequent shoppers save a lot
-special offers and discounts
-spreads cost of spending

-interest is charged

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

what are the advantages and disadvantages of a charge card

A

purchases on credit card but full amount borrowed is paid back at the end of the month

-useful for people who know they have money coming in soon but need to buy now

-may be charged additional fees for using the card
-must have a certain level of income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

what are the advantages and disadvantages of a cheque

A

paper transaction giving a bank permission to transfer a payment from the individuals account to another

-secure payment
-appropriate for postal transactions

-could bounce = fees
-if used in postage could get lost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

what are the advantages and disadvantages of an electronic transfer

A

transaction via mobile device

  • quick and easy
    -convenient
    -popular

-still developing and relies on customer having mobile device

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What are the advantages and disadvanages of contactless

A

allows you to pay without putting i your pin

-quick
-convinient

-no security measures
-amount available to spend is limited

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

what are the advantages and disadvantages of direct debit

A

Authorises the bank to make payment to a
third party. Amount paid is variable.

-keep up with regular payments
-automatic

-amount taken varies so budgeting and controlling costs could be difficult.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

what are the advantages and disadvantages of standing order

Study These Flashcards
A

authorises the bank to make payment to a
third party. Amount paid is fixed.

-keep up with regular payments

-must be reset or cancelled if anything changes
-must have sufficient funds

24
Q

what are the advantages and disadvantages of prepaid cards

Study These Flashcards
A

Individual pays a certain amount of money
onto a card and this is how much they can
spend.

-easy to budget
-specific purposes

-May involved fees to setup and
maintain
-If stolen then the cash on the card
could be lost

25
what are the advantages and disadvantages of mobile banking
making transactions from a mobile device -quick and easy -convenient -popular -still developing and relies on customer to have a mobile device
26
what are the advantages and disadvantages of BACS
Bankers Automated Cleaning Services a direct transfer from one bank account to another in a few days -quick -secure -avoids handling cash/suitable for big payments
27
what are the advantages and disadvantages of CHAPS
Clearing House Automated Payment System. Electronic payment from one bank account to another in the same day. -guaranteed same day transfer as long as bank has been instructed within a certain amount of time -fees per transaction
28
what are the advantages and disadvantages of FPS
Faster Payments. Electronic payment that takes place within two hours. -payment within two hours -usually no fee -some banks may charge fee - requires receivers bank to also have FPS
29
what are the types of current accounts?
-basic -standard -student -premium
30
what are the advantages and disadvantages of a basic
aimed at customers with a poor credit rating + limited features -no banking charges -facilities to set up direct debit -pay in and withdraw cash -no overdraft facilities
31
what are the advantages and disadvantages of a standard
customers must have a fair credit rating and this account is for day to day use -overdraft, direct debit and standing order facilities -no banking charges - interest on overdraft may be high -low interest on savings
32
what are the advantages and disadvantages of a student
designed for individuals in higher education to help them manage their finances -interest free overdraft to a limit -some cards come with travel discounts -limited overdraft facilities -if interest free overdraft is breached then the interest charged is high
33
what are the advantages and disadvantages of a preimum
similar to a standard account but offers additional features for a monthly fee -additional features may include, breakdown cover, cash back and free insurance -special interest rates on overdrafts -monthly fee -have to pay for additional benefits even if customer does not want them
34
what is a current account?
a type of account that is offered by banks and building societies for frequent use, specific to each individual and there specific needs.
35
what are the 6 types of borrowing?
-overdraft -payday loans -mortgages -hire purchases -credit cards -personal loans
36
what are the advantages and disadvantages of an overdraft
a facility to overspend on a current account up to an agreed sum, short term -helps with short term cash shortages -only pay interest on the money you borrow -interest can be high -if you go over the agreed sum or have an unarranged overdraft then there will be penalties -bank can cancel
37
what are the advantages and disadvantages of payday loans
a short term high interest loan to bridge the gap between pay checks -helps with short term emergencies -very high interest rates
38
what are the advantages and disadvantages of a mortgage
a long term loan to buy a property -spreads the cost over many payments over a long period of time (25years) -if payments are missed then property can be repossessed -an increase in interest rates can hinder a persons ability to pay
39
what are the advantages and disadvantages of hire purcchases
a deposit that's put down to then pay monthly instalments -use asset straight away -gain full ownership when all payments have been made -cannot sell the assets when paying -assets can be repossessed if individual defaults on payments
40
what are the advantages and disadvantages of a credit card
buy on a credit and receive a statement at the end of each month showing how much is owed. -if full amount is paid then there us no added interest -charged interest on outstanding amount owed -interest rates are higher than personal loan
41
what are the advantages and disadvantages of a personal loan
borrow a set amount of money for a set period of time -monthly repayments, easy to budget -interest is charged -if loan is secured to asset and the individual misses payments then that assets could be repossessed
42
what are the 6 types of investments and savings?
-ISAs -deposit and saving accounts -shares -premium bonds -bonds and gifts -pensions
43
what are the advantages and disadvantages of ISAs
an individual lends money to companies/government and receive interest payments -interest paid is tax free -no risk -interest is low -small rewards -notice to withdraw
44
what are the advantages and disadvantages of a deposit and saving account
easy access savings account where interest is paid -pays interest, higher than current account -protected by FSCS -requires notice to withdraw money, interest is taxed -if it is a fixed deposit account then the individual will not be able to withdraw money.
45
what are the advantages and disadvantages of shares
investments in a business for return of equity, part ownership -receive dividends -if share price rises then the individual makes a profit -companies do not legally have to pay dividends and dividend yield changed daily -share price can fall -speculative
46
what are the advantages and disadvantages of premium bonds
a government scheme where individuals buy premium bonds and are entered into regular cash draws. can win up to £1,000,000 -savings are secure -chance to win a tax free prize each month -no interest payments -no return unless you win a prize
47
what are the advantages and disadvantages of bonds and gifts
fixed interest securities issued by companies and the government -interest is paid regularly -value of bonds and gifts can fall
48
what are the advantages and disadvantages of a pension
a long term saving plan where an individual makes regular contributions called premium payments -designed to help save for retirement -there are employers contributions added to workplace pensions -there have been lots of pension scandals
49
what are the 7 types of insurance products?
-car -pet -travel -home/building and contents -health -life insurance -life assurance
50
what are the advantages and disadvantages of car insurance
third party and fire/damage, fully comprehensive -makes driving the car legal -compensates owner or third party -expensive for new or young drivers
51
what are the advantages and disadvantages of pet insurance
covers most veterinary costs -prevents animal being put down -peace of mind -pre-existing conditions are not covered.
52
what are the advantages and disadvantages of travel insurance
protects against losses on holiday -compensates for medical fees, theft or damages -existing medical conditions are not covered -can be hard to claim
53
what are the advantages and disadvantages of home/building and contents insurance
compensates for building fire, floods and damages. content thefts, damages even outside the home is covered -needed for mortgages -covers a wide range of damages -no cover if property is left unoccupied for more than 60 days -no cover for general wear and tear -premiums can be high
54
what are the advantages and disadvantages of health insurance
covers some or all private medical bills -pays for private operations - quicker than the NHS -helps to replace some wages - excludes pre existing conditions -may not be needed -premiums rise as individual gets older
55
what are the advantages and disadvantages of life insurance
pays lump sum if the policyholder dies within agreed time period -lump sum paid upon death -supports family and friends -can be used to cover a mortgage -only pays out within the agreed time period -existing medical conditions are not covered
56
what are the advantages and disadvantages of life assurance
pays lump sum of money when the policy holder dies -can be used to cover a mortgage - existing medical conditions are not covered

personal and business finance (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions