revision

• Trade Payables

  Creditors (money the business owes to suppliers: This is a Current Liability: money flowing out)
• Trade Receivables

  Debtors (money owed to the business: This is a Current Asset: money flowing in)
• Current Assets: Recorded on the Balance Sheet (Statement of Financial Position)

  • Cash
  • Bank
  • Stock/Inventory (found on the Profit and Loss account as CLOSING INVENTORY)
  • Trade Receivables or Debtors
  • Prepayments
• Current Liabilities: Recorded on the Balance Sheet (Statement of Financial Position)

  • Trade Payables (Creditors)
  • Accruals
  • Overdrafts
  • Bank loans (up to 6 months)
  • Income tax payable
• Methods of Communicating with Customers

  • Branch
  • Online Banking
  • Telephone Banking
  • Mobile Banking
  • Postal Banking
• Role of money:

  -Unit of account

  -Means of exchange

  -Store of value

  -Legal tender
• What is "interest rate"?

  cost of borrowing or reward for saving
• What is "debt"?

  money owed to creditors (bank)
• What is "credit rating"?

  score given to individuals on how likely they are to repay debts
• What is "bankrupt"?

  individual or organisation legally states its inability to repay debts
• What is "solvent"?

  ability to meet day-to-day expenditure and repay debts
• What is "economy"?

  system of production and consumption of goods and services
• What is a "current account"?

  An account with a bank that money can be payed or withdrawn from on a daily basis without need to give notice
• What is "overdraft"?

  ability to withdraw money that you do not have from a current account
• Types of current accounts:

  -standard

  -packaged premium

  -basic

  -student
• Types of borrowing:

  -overdraft

  -personal loans

  -hire purchases

  -mortgage

  -credit cards

  -payday loans
• What is "expenditure"?

  amount of money you need to cover all expenses/outgoings
• What is "shareholder"?

  someone who has invested in a company in return for equity (shares of business)
• Types of savings & investments:

  -individual savings accounts (SAs)

  -deposit and savings accounts

  -premium bonds

  -bonds and gilts

  -shares

  -pensions
• what is "individual savings account (SAs)"?

  type of saving account where holder is not charged income tax on interest received
• What is "deposit & savings accounts"?

  accounts where interest is paid on the balance and holder needs to give notice before withdrawing funds
• What is "premium bonds"?

  government scheme that allows individuals to save up a set amount by buying bonds
• What is "bonds & gilts"?

  fixed term securities where lender lends money to companies and governments in return for interest payments
• What is "pensions"?

  long-term savings plan where individuals make premium payments throughout their working life
• What is "insurance"?

  an agreement with a third party to provide compensation against financial loss in line with conditions laid down in policy agreement
• What is "premiums"?

  regular payments made by an individual or company to an insurance provider in return for protection
• Bank of England

  responsible for issuing legal tender, setting interest rates and controlling national debt
• Banks

  handles financial transactions and stores money for customers. services include holding deposits, making payments and supplying credit
• building societies

  handles financial transactions and store money. members are part owners and have a right to vote and receive information on the society
• credit unions

  not-for-profit organisations that handle financial transactions and store money for members. responsibility to support community who have voting rights
• national savings & investments

  government backed organisation that offers secure saving options. offers a range of options including ISAs, premium bonds, gilts and bonds
• insurance companies

  protect against the risk of loss in return for premium
• pawnbrokers

  loan money against the security of a personal asset, if not brought back within specified time it is sold.
• payday lenders

  short term source of finance used to bridge the gap between now and receiving wage
• types of consumer protection:

  -financial conduct authority (FCA)

  -financial ombudsmen service (FOS)

  -financial services compensation scheme

  -office of fair trading (OFT)

  -legislation consumer credit
• FCA

  regulate the actions of providers of financial services
• FOS

  represent the interests of the consumer in disputes with financial service providers
• Financial services compensation scheme

  will pay compensation to a consumer of the financial services if service provider is unable
• OFT

  established to regulate all markets, including financial markets
• Legislation consumer credit

  laws passed by uk government to enforce regulation of any firm offering credit to consumers