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BUSINESS UNIT 3 - Statistics

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General Stats
  • This quiz has been taken 1 time
  • The average score is 2 of 50
Answer Stats
Hint Answer % Correct
Total Costs formula Fixed Costs + Variable Costs
100%
Capital employed formula Owner’s Capital + Retained Profit – Drawings
100%
What is mobile banking Ability to carry out financial transactions using mobile devices like phones/tablets.
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What is a credit card A card used to purchase items with borrowed money, paid back over time with interest
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What is a D&S account Accounts allowing individuals to deposit and withdraw money whenever they want
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What is a basic account Accounts designed for people with low credit ratings, very basic, no borrowing, no perks, limited features, some don't even provide debit cards.
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What is a student account Accounts for students with lots of perks like railcards, large overdrafts, discounts, cashback on purchases and can be converted into a normal account once studying ends
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What is a premium account Accounts where you receive additional benefits for a monthly fee like insurance.
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What is a standard account Account with a bank or building society designed for frequent use, money can be paid in and withdrawn daily, and can be used to receive income, pay rent, bills and mortgage, etc.
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Advantages of credit cards Allows a period of interest free credit (usually a month), most cards are widely accepted, can be used online, can cancel if lost or stolen, more convenient than cash, offers loyalty schemes like cashback or collect points
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Advantages of store cards Allows a short period of credit that is interest free, discounts and perks, usually offer loyalty schemes
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Advantages of electronic transfer Almost instantaneous, provides a record of payment, no additional costs incurred, easy to use for more frequent transactions
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Advantages of Premium bonds Amount of interest paid is decided by a monthly draw so earnings could be much more than what could be earned normally, 100% secure so you cannot lose money, easily withdrawn with no loss or penalty, prizes are not taxed, save money on tax
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Define margin of safety Amount of units sold above and beyond the breakeven point
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What is depreciation An accountancy concept used to spread the cost of an asset over its useful life. It is crucial to give fixed assets a realistic value, so they are depreciated annually. Assets are shown on the statements of financial position and must be portrayed accurately.
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What is an overdraft An agreed amount that can be taken out of a bank account without facing penalties
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What is direct debit An agreement made with a bank allowing a 3rd party to withdraw money from an account on a set day to pay for goods/services received
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What is standing order An agreement made with a bank to transfer a fixed sum of money to a 3rd party account on a set date on a regular basis
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What is SLD An asset is depreciated by a set amount per year.
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What is RBD An asset is depreciated by a set percentage of its remaining value per year. A senior accountant sets this value and is stated in financial reports. The amount of money the asset reduces by decreases as it gets older per year.
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What is an ISA An ISA allows an individual to save money without paying tax on interest earned. Some ISAs make you lock away your money for a set period, so you are forced into a saving plan. They offer a higher rate of interest than in alternative saving accounts
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Where is depreciation showed on the SOCI and SOFP Annual depreciation is shown as an expense on the SOCI. Each year depreciation is deducted from the net book value of an asset at the end of the year, this is the value of the asset recorded in the SOFP.
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What is a SOCI used for and what does it do A SOCI includes performance evaluation, investment decision making, trend analysis and forecasting, risk management, strategic decision making. Operating-based and cash supported, recurring and sustainable.
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What is a SOFP used for and what does it do A SOFP can be analysed in several ways, including comparing figures (assets and liabilities) to understand a business’s health, comparing year on year with your own business or comparing with other businesses, or comparing areas of the same business to measure management efficiency. Healthy receivables, reasonable inventory levels, strong equity in growth from retained earnings and controlled leverage (no excessive borrowing).
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What is a non-current asset Assets that stay in the business for over a year. Either tangible (machines, vehicles, buildings) or intangible (trademarks, brand name, goodwill.)
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What is a current asset Assets that stay in the business for under a year. Owned by the business whose value can fluctuate on a regular basis, sometimes every transaction
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Inventory turnover formula (Average Inventory/ Cost of Sales) x 365
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What are cheques A written order to a bank to make a payment for a specific amount of money from one person’s account to another account
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What is mobile banking Banking and carrying out financial transactions using mobile devices
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What is telephone banking Banking over the phone with an automated bot or a real bank clerk
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What is a branch Banks in real life
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Invoice Discounting Borrowing money using the accounts receivable as collateral for a loan (different to debt factoring as the business retains responsibility for collection). Short term and external. Benefits: Immediate cash flow covers cash flow gaps, confidential as customers do not know the business is using it. Drawbacks: Reduces profits due to fees and interest charged by the lender, business is still responsible for collecting the debt.
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What is HMRC British government department in charge of collecting taxes
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What does a SOFP do Calculates the net worth of a business by balancing what the business owns against what it owes.
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What is a SOCI Calculates whether the firm has made a profit or a loss by deducting all expenses from sales revenue. Shows the trading position of the business, which is used to calculate gross profit, it then considers all other expenses to calculate the profit or loss for the year. It records sales, costs and profit.
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Advantage of mortgages Can buy a house even if you do not have enough savings, you build equity in the property with each payment
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Disadvantage of cash Can get lost/stolen, risk of counterfeit/fake money, can’t be used online/virtually, only suitable for purchases up to a certain amount as it’s impractical to carry around loads of cash.
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Disadvantage of store cards Can only be used in that store, risk of debt, missed payments harm credit score
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Advantages of prepaid cards Can set a budget in advance to avoid overspending, if lost or stolen the loss is only limited to the amount remaining on the card, an effective way of controlling the amount spent by children like money for school lunch or transport.
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What is a contactless card Cards containing antennae allowing money to be transferred when the card touches the terminal.
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What is a credit card Cards issued by financial institutions allowing customers to delay payments for goods/ services
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What is a debit card Cards issued by financial institutions with payments being deducted from a current account
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Why is cash flow forecasting so important Cash is the life of the business. Cash flow forecasts make advanced warnings of cash shortages, ensures the business can afford to pay suppliers/employees, spots issues with customer payments, reassures investors, for control.
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Name inflows in order of:Ca S, Cr S, A S, I, G, L, R R, Receipts from trade.... Cash sales, asset sales, interest, grants, loans, rent received, receipts from trade debtors
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Opening balance formula Closing balance of the month before
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Profit using contribution formula Contribution per unit – margin of safety
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Advantages of mobile banking Convenient ads can be used at any place and any time, secure method
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Where is a prepayment located in the SOFP and the SOCI Current Asset in SOFP and Expense in SOCI
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Current Ratio formula Current Assets/Current Liabilities
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Working Capital formula Current Assets - Current Liabilities
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Liquid Capital Ratio formula (Current Assets – Inventory)/ Current Liabilities
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Net Assets formula (Current Assets + Non - Current Assets) + (Current Liabilities + Non - Current Liabilities)
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Where is an accrual located in the SOFP and the SOCI Current Liability in SOFP and Expense in SOCI
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What is NBV Current value after depreciation occurs
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What is a non-current liability Debt owed by the business to be paid back in over a year like mortgages and loans
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What is a current liability Debt owed by the business to be paid back in under a year like overdrafts, trade payables and accruals
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Define discount received Discounts are offered when buying early or in bulk, reducing costs over time
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Disadvantage of shares Don't have a lot of control, could lose capital, no guarantee, shares are not free, shares fluctuate, market is volatile
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Define interest received Earned on positive bank balances or loaning to companies/individuals
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Advantage of Standard accounts Easy to access cash, convenient way to pay bills, low interest rates for borrowing money
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Disadvantage of credit cards easy to overspend, easy to create debt, interest can build up
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Advantages of debit cards Easy to use, more convenient than cash, easier to keep safe than large sums of money, low risk of theft, widely accepted, suitable for online transactions, secure, can cancel it if you lose it or it gets stolen
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Advantages of cash Easy to use, tangible, untraceable, customers feel confident using, simple
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Advantages of direct debit Easy way to make regular payments like utility bills, quick and easy to set up, amount paid can vary to ensure the payment matches the amount required by the vendor
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Disadvantage of car insurance Extra expense, premiums can be expensive, premiums may be more depending on your age and experience which is something you cannot control
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Disadvantage of Pet insurance extra expense, premiums increase after claims
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Disadvantage of HC insurance Extra expense, some items are irreplaceable
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Disadvantage of BACS : Faster payment is not offered by all banks or branches and the customers may therefore have to default to BACS which can take 3 days to transfer payments, a limit is set on the amount that can be transferred in any single transaction.
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Advantages of BACS Faster payments allow almost instant transfers that are guaranteed within 2 hours, can be accessed in several ways including in a branch over the telephone and online, no telephone costs.
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Disadvantage of mobile banking Features are still limited, and so mobile banking does not offer all the functionality of internet banking.
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What are net assets Figure that represents the total value of all assets after you have taken the liabilities into account.
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Advantages of loans fixed monthly payments are easy to plan for and budget for, flexible, may improve credit score, no collateral needed
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Advantage of an overdraft Flexible, no fixed repayments, quick and easy to setup
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Advantages of hire purchases Full use of item whilst paying for it, easier to split lump sums into smaller amounts as you can pay for it easier since you will receive wages in between, ownership transferred at the end
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What is the FSCS Gives compensation to customers if financial service providers are unable to do so
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What is the FOS Government organisation in the UK that backs customers in disputes with financial service providers and only gets involved when the issue cannot be resolved
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What is money advice service Government organisation set up to offer free and impartial advice in the UK
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What is IVA Government organisation which allows an individual to declare themselves bankrupt while agreeing to pay all or part of the money they owe to creditors through an insolvency practitioner
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Markup formula (Gross Profit/ Cost of Sales) x100
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Net Profit formula Gross Profit - Expenses - Tax
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GPM formula (Gross Profit/Revenue) x 100
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Disadvantage of premium bonds Higher initial investment required to purchase premium bonds, no guaranteed return, may not win big so prizes are smaller than normal accounts
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Disadvantage of an overdraft High interest rates, risk of debt, could be denied the overdraft
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Disadvantages of hire purchases High overall cost, don't own it until the very end, late payments decrease credit score, will get repossessed if you miss payments so there will be wasted money
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Formula for straight line depreciation (Historic Value - Residual Value) / Expected Life
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Define credit periods How long customers have to pay
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Define breakeven How many units a business must sell to fully covers their costs. When they don't make a profit or a loss
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What is goodwill How much value the reputation and name adds to the company
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What is IT How quickly a business sells through their stock levels
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Disadvantage of direct debit If the payer makes a mistake and takes too much it is the payees’ responsibility to get back their money, the payer also determines the amount.
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Advantages of payday loans Immediate cash, good for emergencies
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What is capital income Income that comes from sources other than selling goods/services, used to buy non-current assets
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What is revenue income Income that comes from tenants/customers like cash and credit sales, rent received, discount received, interest received, commission received.
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Disadvantage of D&S Interest earned is taxed, interest for saving is lower than interest for borrowing
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Advantage of credit cards Interest-free if you pay on time, the higher your credit score the more you can borrow,
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Disadvantage of credit cards Interest is charged on balances not paid off within a month, a limit will be set on the amount of credit allowed, can encourage overspending and debt.
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Advantages of D&S Interest is earned on positive balances, you can deposit and withdraw money whenever you want, some need regular deposits which will force you into a savings plan
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Name all revenue expenditure in this order:Inv, Ren, Rat, Hea, Lig, Wat, Insu, Adm, Sal, Wag, Mar, Int pai, Dep, Ban Char, Dis Allo, Inventory, Rent, Rates, Heating, Lighting, Water, Insurance, Administration, Salary, Wages, Marketing, Interest paid, Depreciation, Bank Charges, Discount Allowed
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Name some CA inventory, trade receivables, prepayments, cash in the bank, cash in hand.
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Disadvantage of pensions Invested in the stock market so is not risk free, value could fluctuate, cannot be accessed until a certain age
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Venture Capital Investment from a firm or an experienced individual in exchange for an ownership stake, usually for high growth potential businesses. Long term and external. Benefits: It can bring in new skills, expertise and opportunities not just money. No interest payments as its equity finance. Drawbacks: Involves giving up a share of ownership and therefore control, investors expect a high return and so may influence management decisions and put pressure on the owner/creator
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P2P Lending Involves one business/individual lending money to another in return for interest payments, facilitated via an online platform. Short or long term and external. Benefits: Can be faster to arrange than traditional bank loans, potentially lower interest rates than their alternatives meaning that money is saved. Drawbacks: still needs interest repayments, platforms charge fees and the business are still in debt.
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What is a store card Issued by a retail institution so customers can delay payments for goods/services.
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What is a charge card Issued by financial institutions allowing customers to delay payments for goods/services for a short period of time, the balance must be paid off in full when the statement is issued
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What are trademarks Key features of a business like logos, symbols, brand name. It drives customer loyalty
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Define mortgages Large loans used to buy large assets usually property like houses, lasts a long time and secured against the asset
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What is a mortgage Large loans used to purchase very large items, usually property, like a house
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What is consumer credit Laws passed by the government to say that if you offer a customer credit you must be registered with the FCA
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What are pawnbrokers Leaving something valuable as security for a loan, can sell useless items to create space or sell items to gain fast money
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What are patents Legal protection on inventions
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Name 4 functions of money Legal Tender, Store of Value, Means of Exchange, Unit of Account
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Name 5 capital incomes, in order of:L, D, OC, S, M. Loans, Debentures, Owner's Capital, Shares, Mortgages
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Mortgages Long term loans secured against a specific asset, usually a property like a house. Long term and external. Benefits: Allows the purchase of expensive property, lower interest rates than unsecured loans due to the security, predictable repayments help people budgeting. Drawbacks: Asset can be repossessed if repayments are missed. Long term commitment is required with large total interest paid over a long time.
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Define debentures Long to medium term unsecured loan paid with interest regularly and then paid off in full on a specific date, no collateral
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Disadvantage of standard accounts Low interest rates for saving, potential high overdraft fees, no extra perks
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Advantages of cheques Low risk form of payment as the cheque can only be cashed by the named payee, widely accepted for face to face and postal transactions, there is no need to provide change as it can be written for an exact amount
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Grants Lump sum provided by the government or other organisation, usually for a specific purpose, which doesn’t need to be paid back. Short term and external. Benefits: no repayment required as it is a cost-free finance, no interest charges or loss of ownership. Drawbacks: tight eligibility criteria and high competition, often have strict conditions on how the money can be spent.
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Name some NCA machines, vehicles, buildings, trademarks, brand name, goodwill.
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Disadvantages of mortgages May be repossessed if you miss payments, lasts a very long time so a long financial responsibility, it loses money in value over time, high interest rates
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What is Liquid Capital Ratio Measures a business’s liquidity, includes the current level of inventory in the business, it is the hardest current asset to turn into cash quickly. It is the same as current ratio but it just factors in the inventory and takes it away from the current assets.
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What is a hire purchase Method of buying an expensive tangible asset where the business pays for it in instalments over a set period, with ownership being transferred after final payment
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Net Current Assets Money available from current assets-current liabilities. Used for day-to-day expenditure. Short term and internal. Benefits: encourages effective cash flow management, no interest payments. Drawbacks: Puts pressure on cash flow, may negatively affect supplier relationships if terms are tightened.
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Loans Money borrowed from a financial institution, repaid with interest over an agreed period. Long term and external. Regular and fixed repayments aid budgeting, large sums can be acquired, owner retains control. Drawbacks: Interest is charged, can be difficult for new businesses to access, assets may be required as security for the loan (collateral).
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What is a loan Money borrowed from a financial institution used to purchase a large item with fixed monthly repayments
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Define sales Money from selling products/services, either cash credit debit or electronic transfer
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Donations Money given voluntarily to a charity or social enterprise, not expected to be repaid. Short or long and external. No repayment or interest, good for community relations. Drawbacks: Unreliable source of finance, amount raised is often small and for specific causes not for general business operations.
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Define shares money invested into a business by shareholders, may get paid dividends, have a stake in the profit, businesses can buy and sell shares on the stock market if they are a PLC only if registered with Companies' House
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What is a prepaid card Money is uploaded onto a card with transactions then being withdrawn to reduce the balance
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Define loans Money lent to a business, paid back over a period of time with interest
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What is revenue expenditure Money spent on day-to-day running costs
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What is capital expenditure Money spent on non-current assets or intangibles
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What does a Cash Flow Forecast do or show Monitors cash flow, financial statement. Helps business keep an eye on finances and helps identify any areas of concern. Cash flow problems are the main reasons businesses fail, need regular and reliable cash flow.
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Disadvantage of Premium accounts Monthly fees are expensive
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Name some NCL mortgages, bank loans
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What is the markup MU looks at profit as a percentage of cost of sales, it shows what percentage of cost of sales is added to reach the selling price. So, if an item cost £6.70 to make and let’s say a 67% mark-up is applied, the selling price is £11.19. Or if a markup of 20% is applied then the selling price is £8.04.
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Disadvantage of charge cards Must be paid in full every month, often an annual fixed fee is applied.
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Define Owner's capital Net amount of money that the owner has invested into the business
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ROCE formula (Net Profit/Capital Employed) x100
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NPM formula (Net Profit/Revenue) x 100
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Disadvantage of prepaid cards No credit so you cannot borrow any money, not a lot of security if it gets lost or stolen, some places do not accept this form of payment
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Disadvantage of Basic accounts No overdraft, sometimes no debit card, very basic, no perks
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Disadvantage of Life insurance No payment made if they do not die, extra expense
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Disadvantage of CHAPS Normally there is a fixed charge per transaction regardless of the amount transferred.
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What is cash Notes/coins
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What are credit unions Not-for-profit organisations that handle financial transactions and store money for its members, members are owners and have voting rights
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Disadvantage of ISA Notice is often needed to make withdrawals so you have less control and freedom, limit to the amount being placed in an ISA, may be a set amount of withdrawals that can be made
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What is TPD Number of days a business takes to pay their invoices to creditors (suppliers).
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What is TRD Number of days an invoice remains unpaid, creating potential cash flow issues.
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What are NS&I Offers secure saving options and is backed by the government, offers gilts, premium bonds, ISAs
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Disadvantage of contactless cards Often only accepted for quite small transactions
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Disadvantage of cheques Old fashioned, easy for the consumer to make errors when writing the cheque which will create problems for both the consumer and recipient, time delay between writing the cheque and it being cashed out could cause a consumer to go overdrawn, the bank could refuse to clear the cheque.
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Closing balance formula Opening Balance + Net Cash Flow
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Cost of goods sold formula (Opening Inventory + Purchases) - Closing Inventory
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What is citizen's advice Organisation ran by charities that offer advice on a large range of issues, both financial and non-financial. Advice is offered at physical centres as well as online centres and via email/phone calls. This covers areas like debts, benefits, banking, pensions and insurance.
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What are pension companies Organisations that sell policies and invest the money saved into the stock market, it is used to save money to fund retirement
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Name some CL overdrafts, accruals, trade payables.
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Disadvantage of Student accounts Overspending is very easy
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Name all sources of finance in this order:OC, RP, C, VC, P2P, Le, HP, SOA, Lo, NCA, M, DF, ID, TC, G, D Owner's Capital, Retained Profit, Crowdfunding, Venture Capital, Peer to peer lending, Leasing, Hire Purchase, Sales Of Assets, Loans, Net Current Assets, Mortgages, Debt Factoring, Invoice Discounting, Trade Credit, Grants, Donations
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What are building societies Partially owned by members, they have voting rights, carries out same functions as a bank
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Name 4 intangibles, in order of:P, G, T, BN Patents, Goodwill, Trademarks, Brand Name
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Hire Purchase Paying for an asset in instalments with ownership being transferred to the business only after the final payment. Long term and external. Benefits: can acquire the asset without a large upfront sum, asset is eventually owned in the long run unlike leasing the item. Drawbacks: Interest charges are added to the overall cost, the asset can be repossessed if the payments are missed which means a loss of money
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Leasing Paying to use an asset in instalments, but the ownership still remains with the supplier throughout the agreement. Medium to long term and external. Benefits: avoids large initial cost for the asset, maintenance is often the responsibility of the leasing company, so the person has less responsibilities and doesn’t spend on anything apart from the car itself. Drawbacks: More expensive than buying the car in the long run, business never owns the asset.
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Disadvantage of standing order Payments are taken regardless of the customers balance which could lead to the unplanned use of an overdraft facility, payments will be continued to be made unless cancelled.
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What is electronic transfer Payment transferred directly from one bank account to another.
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What do businesses that are VAT registered have to do Pay VAT to HMRC and should be shown in the cash flow forecast
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What are pensions Pensions are a way of saving for retirement, where money is set aside during your working life and invested so it grows to financial support when you eventually retire
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Trade Credit Period of time offered by suppliers to buy now and pay later. Short term and external. Benefits: improves short term cash flow, allows time to sell goods before having to pay the suppliers. Drawbacks: May miss out on early payment discounts, can damage supplier relationships if the terms are not met.
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Owner's Capital Personal money invested by the owner into the business. Long term and internal. Benefits: Quick and convenient, no interest or repayment needed, owner keeps control. Drawbacks: Amount available may be limited, high risk for the owner, may be needed for personal use.
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What are premium bonds Premium bonds are savings accounts where the amount of interest paid is decided by a monthly prize draw. There is a higher initial investment to purchase premium bonds, however
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Disadvantage of Health insurance Premiums can be expensive, doesn't cover pre-known conditions, extra expense, paying for something that you hope you will not use
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What is money laundering Process of concealing the origins of illegally obtained money and making it appear as if it came from a legal source
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What are debt counsellors Professionals who offer independent advice on how best to manage debt
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What is IFA Professionals who offer independent advice to their clients about their financial matters, but it has a fee, it includes advice on savings, investments, mortgages and pensions
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Retained Profit Profit kept within the business to fund future expenditure and growth. Short or long term and internal. Benefits no interest charges, immediately available and convenient, owners retain complete control. Drawbacks: Amount of profit available may be limited, reduces payments to shareholders which means they could lose interest or be dissatisfied, money could also earn interest elsewhere.
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What is gross profit Profit left over after cost of goods sold is deducted
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What is net profit Profit left over after expenses and tax is deducted from gross profit
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What are insurance companies Profit-making organisations that protect customers from risk, premiums are expensive
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Advantage of car insurance Protection from theft and damage, meets legal requirements
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Advantage of Travel Insurance Protection from theft and damage, protection for loss and delay, medical costs also covered
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Advantage of HC insurance Protects from theft and damage, protection inside and outside
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Crowdfunding Raising small amounts of finance from a large number of people, usually through the internet. Short term and external. Ability to raise finance from many investors, can test market demand. Drawbacks: Time consuming, may involve giving up some ownership, high competition for funds.
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Advantage of Life insurance Reduces financial stress, gives some compensation, pays for funeral
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Advantages of charge cards Reduces risk of running up debts, allows a short period of credit, avoids the need to carry cash around, often offers additional perks
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What is the OFT Regulates all financial markets, supports healthy competition and fair practices
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What is the FCA Regulates financial service providers in the UK
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Define rent received Renting to businesses/clients
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Disadvantage of electronic transfer Risk of loss if the transfer is incorrectly set up, not appropriate for face-to-face transactions
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What is the ROCE ROCE looks at the percentage return of profit on capital employed. So, for every £1 invested into the business, what percentage of that is being generated as profit. So, if I invest £6.70 into a business and I have a ROCE of 67% then £4.49 of that is being made as profit. If I invest £1 into the business and get a ROCE of 99% then 99p of that is being made as profit.
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Gross Profit formula Sales Revenue - Cost of Sales
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What is capital employed Second half of statement of financial position is how everything is financed, how the capital employed is put together. It is the total amount of capital tied up in a business at a point in time
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Advantages of contactless cards Secure method of making payments, popular, easy and convenient
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Debt Factoring Selling a business’s debts (accounts receivable) to a third party at a discount for immediate cash. Short term and external. Benefits: immediate cash improves liquidity fast, reduces time and resources spent chasing debts. Drawbacks: Business receives less than the full invoice value (the factoring company charges a fee).
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Sales of Assets Selling items of value no longer in use to generate cash. Long term and internal. Benefits: No interest charges, can raise fast money, creates space, no useful assets are lost. Drawbacks: May not get full market value, business loses use of the asset, can be difficult to sell certain assets.
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Contribution per Unit formula Selling Price - Variable Costs per Unit
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Total Revenue formula Selling Price x Units sold
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Define commission received Selling products from other businesses to earn a percentage of sales of that item/service
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What are payday loans Short term finance used to bridge the gap between wages, very high interest and small amounts of cash available, offers emergency cash
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Disadvantage of debit cards Short time between making the transaction and the money being withdrawn from the customer’s account may result in overspending, not always accepted for reasonably small transactions
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What is Current Ratio Shows the amount of current assets in relation to current liabilities, expressed as x:1. So 2:1 means for every £2 a business has in current assets they have £1 in current liabilities. So, if the ratio is 6.7:1 then for every £6.70 a business has in current assets, it will have £1 in current liabilities.
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Advantage of Premium accounts Simplifies insurance as it is all in one place, saves money with perks in longrun
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What is a payday loan Small, very high interest loan used to bridge the gap between wages
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Advantage of Health insurance Some compensation if you get ill, if it is used to fund private care the services may be better and quicker, less financial stress
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What are banks Stores money, handles financial transactions and supplies credit
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Advantage of Student accounts Students can learn to be independent and build experience with accounts
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What is CHAPS System that allows the transfer of payments directly from one bank account to another. Used for big and urgent payments that need paying the same day with no upper limit.
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What is BACS System that allows the transfer of payments directly from one bank account to another. Used for regular and low-cost transactions with efficiency.
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Advantages of pensions Tax free, regular income after retirement, employers can add to pensions
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Advantages of ISA Tax is not charged on interest earned, slighter higher rates for better saving, some force you into a savings plan, save money on tax
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What is the historic price the original purchase price
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Disadvantage of Travel Insurance The person claiming will need to pay upfront, extra expense
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Disadvantages of loans There are fees for late payments, risk of over-borrowing, have to pay interest
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Advantages of standing order The same amount is paid each time which makes it easier for the payee to budget and plan finances, easy both to set up and to cancel, no need to remember to make regular, standard payments.
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What is PCW These websites collate prices for similar goods and services within an industry, letting customers make comparisons easy and find the best deals
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Breakeven formula Total Fixed Costs / Contribution per Unit
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Net Cash Flow formula Total Inflows - Total Outflows
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Total contribution formula Total revenue – total variable costs
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Trade payables days formula (Trade Purchases/ Credit Purchases) x365
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Trade receivable days formula (Trade Receivables/Credit Sales) x 365
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Advantages of CHAPS Transfers can be made the same day assuming instructions are received prior to a set time, there is no limit on the amount that can be transferred in a single transaction.
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What are shares Type of investment that involves buying a portion of a companies’ ownership. When you invest in shares you become a part owner of the company meaning you have a stake in the profits and growth of the business. Many companies pay dividends which provide regular income for the investor, clearly there are transaction costs for buying and selling shares
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What is online banking Use of internet to carry out banking transactions
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What is postal banking Use of postal services to carry out paper-based transactions
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Formula for reducing balance depreciation Value of asset x depreciation percentage
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Disadvantages of payday loans Very high interest rates, small amounts borrowed, easy for fraud, risk of debt
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Advantage of Basic accounts Very simple, no monthly fee, good for saving
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Advantage of Pet Insurance Vet bills are expensive and there could be no alternative than to put the pet down but this insurance covers this, covers expensive vet bills
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Name outflows in order of:W, U, R, P to suppliers, P for fixed assets, I on loans, D, D Allowed Wages, utilities, rent, payments to suppliers, payments for fixed assets, interest on loans, dividends, discount allowed
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What is an accrual When you pay for something after the period of which it relates
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What is a prepayment When you pay for something before the period of which it relates
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Advantages of shares You get a stake in the profits, easy to buy and sell, can get paid dividends, get some control over the company, potential for high return so large capital gain
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