BTEC Unit 3: Personal and Business Finance
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Questions and Answers

What is a disadvantage of using cash as a payment method?

  • Widely accepted
  • Easy to control expenditure
  • Risk of loss or theft (correct)
  • Suitable for large items of expenditure

    • Credit cards do not charge interest on the outstanding balance.

    False

    What should be monitored when using a debit card?

    spending and bank balance

    A disadvantage of using cheques is that it can be costly if the cheque is not ______ due to insufficient funds.

    <p>honoured</p> Signup and view all the answers

    Match the payment methods with their corresponding advantages:

    <p>Cash = Confidence and easy expenditure control Credit card = Allows deferring and spreading payments Electronic transfer = Quick and almost instant Cheque = Secure for postal transactions</p> Signup and view all the answers

    Which function of money allows it to be used to determine the value of goods and services?

    <p>Unit of Account</p> Signup and view all the answers

    What is a life event that may require a significant amount of money?

    <p>Marriage</p> Signup and view all the answers

    People from deprived backgrounds are likely to have the same view of money as those from affluent backgrounds.

    <p>False</p> Signup and view all the answers

    Money loses its value over time.

    <p>False</p> Signup and view all the answers

    What might adolescents prioritize financially compared to childhood?

    <p>Wanting to be more independent and socializing away from family.</p> Signup and view all the answers

    What is the purpose of legal tender?

    <p>It is a legally recognized form of payment for transactions.</p> Signup and view all the answers

    Money acts as a __________ by allowing individuals to trade goods and services.

    <p>means of exchange</p> Signup and view all the answers

    During middle age, individuals may spend more on __________ and __________ for their future.

    <p>mortgages, pensions</p> Signup and view all the answers

    Match the functions of money with their definitions:

    <p>Unit of Account = Determines the value of goods Means of Exchange = Facilitates trade Store of Value = Maintains value over time Legal Tender = Accepted form of payment</p> Signup and view all the answers

    Match the life stage with its corresponding financial needs:

    <p>Childhood = Limited needs, mainly reliant on parents Young adult = University or starting a career Middle age = Support family, save for children Old age = Pension reliance, fewer financial needs</p> Signup and view all the answers

    Which statement is true regarding the role of money in individuals' lives?

    <p>The role money plays can vary greatly among individuals.</p> Signup and view all the answers

    Which of the following is an example of an external influence on finances?

    <p>Changing interest rates</p> Signup and view all the answers

    Older adults generally handle higher financial needs than younger individuals.

    <p>False</p> Signup and view all the answers

    A banknote that is legal tender can be refused as payment by a business.

    <p>False</p> Signup and view all the answers

    What could be a potential impact of using money inappropriately?

    <p>Financial difficulties or debt.</p> Signup and view all the answers

    What financial challenge might young adults face when starting their careers?

    <p>Taking out student loans or borrowing money.</p> Signup and view all the answers

    What is one of the functions of money?

    <p>To serve as a medium of exchange</p> Signup and view all the answers

    Using money wisely can lead to financial benefits.

    <p>True</p> Signup and view all the answers

    Name two advantages of using credit cards for payments.

    <p>Convenience, rewards points</p> Signup and view all the answers

    Many businesses accept __________ as a method of payment because it is fast and efficient.

    <p>digital payments</p> Signup and view all the answers

    Match the payment methods with their advantages:

    <p>Cash = Widely accepted, no transaction fees Credit Card = Offers rewards and builds credit history Debit Card = Directly linked to bank account, helps avoid debt Mobile Payment = Quick and convenient transactions</p> Signup and view all the answers

    Which of the following payment methods is commonly noted for its risk of causing unmanageable debt?

    <p>Credit Card</p> Signup and view all the answers

    Payment methods have remained the same over time without any changes.

    <p>False</p> Signup and view all the answers

    Which payment method requires resetting or canceling if anything changes?

    <p>Standing order</p> Signup and view all the answers

    A charge card must always be paid in full regardless of available funds.

    <p>True</p> Signup and view all the answers

    What is a primary disadvantage of contactless cards?

    <p>Only accepted for relatively small transactions.</p> Signup and view all the answers

    A __________ allows instant transfers that are guaranteed within 2 hours.

    <p>BACS</p> Signup and view all the answers

    Which payment method can only be spent up to the amount uploaded?

    <p>Pre-paid cards</p> Signup and view all the answers

    Match the following payment methods with their advantages:

    <p>Standing order = Ensures regular payments are not missed Pre-paid cards = Can only spend up to the amount uploaded Mobile banking = Convenient and increasingly popular Charge card = Avoids long-term debt</p> Signup and view all the answers

    What is a disadvantage of standing orders?

    <p>Money taken regardless of balance.</p> Signup and view all the answers

    Store cards may encourage debt due to additional spending opportunities.

    <p>True</p> Signup and view all the answers

    What is the maximum amount that can be transferred in a single transaction using CHAPS?

    <p>Amounts are unlimited</p> Signup and view all the answers

    Faster Payments Service guarantees a transaction completion within 2 hours.

    <p>True</p> Signup and view all the answers

    What does BACS stand for?

    <p>Banker’s Automated Clearing Services</p> Signup and view all the answers

    The ________ is a payment method that allows same-day transfers of any amount.

    <p>CHAPS</p> Signup and view all the answers

    Match the following payment methods with their characteristics:

    <p>BACS = Transfers may take a few days FPS = Guaranteed within 2 hours CHAPS = Same day transfer of any amount Standard bank transfer = 3 days to process</p> Signup and view all the answers

    Which payment method is most suitable for a house mortgage payment?

    <p>CHAPS</p> Signup and view all the answers

    There is no fixed charge for CHAPS transactions.

    <p>False</p> Signup and view all the answers

    Name two factors that influence your attitude to risk.

    <p>Personal experience and financial knowledge</p> Signup and view all the answers

    Study Notes

    Level 3 BTEC Foundation Diploma Business/Law/Finance Unit 3: Personal and Business Finance

    • This unit covers personal and business finance.
    • The first lesson focuses on the function and role of money.

    Learning Outcomes

    • Identify the functions of money.
    • Analyse how individuals can use money effectively.
    • Analyse the consequences of using money inappropriately.
    • Evaluate different money management strategies.

    Functions of Money

    • Unit of Account: A monetary value assigned to goods or services. The price represents the quality and purpose of the item or service.
    • Means of Exchange: Money allows for the trade of goods and services.
    • Store of Value: Money maintains its value over time. Amounts held in bank accounts generally do not lose value.
    • Legal Tender: A country’s currency is typically accepted for all transactions regardless of item or service.

    Unit of Account Examples

    • A Range Rover, £200,000
    • Cadbury Dairy Milk, 50p

    Money Management Strategies

    • Avoid debt.
    • Control Costs
    • Avoid legal action and/or repossession
    • Remain Solvent
    • Maintain a good credit rating
    • Avoid bankruptcy
    • Provide insurance
    • Counter inflation
    • Set financial goals and targets
    • Generate income and savings
    • Manage money to fund purchases

    Life Events

    • Life events can be planned or unplanned and require significant financial resources.
    • Examples include marriage, accidents, and having a family.

    External Influences

    • External influences include factors beyond an individual's control, such as the economy, changing interest rates, inflation, government action (e.g., Brexit), and taxation.

    Life Stages and Financial Needs/Implications

    • The chart shows how financial needs and implications can vary throughout specific life stages.

    Ways to Pay

    • A range of payment methods are considered and evaluated.
    • Methods include cash, debit cards, credit cards, cheques, electronic transfers, direct debits, standing orders, pre-paid cards, charge cards, store cards, mobile banking, contactless cards, BACS, and CHAPS. -Advantages and disadvantages are listed for these methods
    • The method chosen often depends on the product or service being purchased.

    Examination Question

    • Discussing the personal attitudes towards borrowing and saving of people in old age.

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    Related Documents

    Level 3 BTEC Foundation Diploma Business/Law/Finance Past Paper PDF

    Description

    Explore the essentials of personal and business finance in this BTEC Level 3 Unit 3 quiz. Learn about the functions of money, effective money management strategies, and the consequences of misusing finances. This quiz helps reinforce key concepts in financial literacy.

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