Personal Finance (business key terms)

• unit of account

• means of exchange

• store of value

• legal tender

the action of spending funds → needed to cover all expenses e.g bills

the cost of borrowing money/the reward for saving money

money owed

a score given to individuals on how likely they are to repay debts based upon their previous actions

when an organisation or individual legally states its inability to repay debts

the ability to meet day-to-day expenditure and repay debts

• cash

• debit card

• cheque

• electronic transfer

• direct debit

• standing order

• pre-paid card

• contactless card

• charge card

• store card

• mobile banking

• BACS (Banker’s Automates Clearing Service Faster Payment)

• CHAPS (Clearing House Automated Payment System)

the ability to withdraw money that you don’t have from a current account

an account with a bank or building society designed for frequent use, e.g regular deposits and withdrawals

• rate of interest paid on an positive balance

• rate of interest charged on a negative balance

• overdraft limit

• changes on unauthorised overdrafts

  • additional incentives

• standard

• packaged, premium

• basic

• student

• overdraft

• personal loans

• hire purchase

• mortgages

• credit cards

• payday loans

• ISA (Individuals Savings Account)

• deposits and savings account

• premium bonds

• bonds and gilts

• shares

• pensions

someone who has invested in a company in return for equity i.e a share of the business

placing money in a secure place so that it grows in value and be used in the future

• low or zero risk as money saved is guaranteed to be available in the future

• inflations can reduce the spending power of money saved

• interest payments

• financial security/peace of mind

speculative commitment to a business venture in the hope that it generates a financial reward

• can go wrong and all or some of the value may be lost

• no guarantee of a return

• if successful, there is potential for a high financial return (significantly higher than could be earned in interest)

• can be exciting, some people will invest in shares, antiques art or foreign currencies, for e.g in the hope of high returns

an agreement with a third party to provide compensation against financial loss in line with the conditions laid down in the policy agreement

• car

• health

• home and contents

• pet

• travel

• life assurance and insurance

organisations that offer financial services to individuals and'/or businesses e.g services like deposit/withdraw money, obtain credit, make investments etc.

• Bank of England

• Banks

• Building Societies

• Credit Unions

• National Savings and Investment

• Insurance companies

• Pension companies

• Pawn brokers

• Payday loans

• branch

• online banking

• telephone banking

• mobile banking

• postal banking

• FCA (Financial Conduct Authority)

• FOS (Financial Ombudsman Service)

• FSCS (Financial Services Compensation Scheme)

• OFT (Office of Fair Trading

• legislation : consumer credit

• citizens advice

• Independent Financial Advisor (IFA)

• price comparison websites

• money advice services

• debt counsellors

• Individual Voluntary Arrangements (IVAs) Bankruptcy

actions by a business that involve money going into or out of a business e.g making a sale or paying a bill

when an individual acquires money from a company for personal gain through illegal actions

• profit

• loss

• gross profit

• operating profit

• net profit

• gross profit = sales - cost of goods

• operating profit = gross profit - expenses

• net profit = gross profit - expenses + revenue income

item of value owned by a business that are likely to stay in a business for more than a year

any item of value owned by an individual or firm

money owed to the business from sales made but not yet paid for

money the business owes from supplies purchased but not yet paid for

the value of inventory (stock) at the start of the financial year

the value of inventory (stock) at the end of the financial year

• capital income → the money invested by the owners or other investors that is used to set up a business or buy additional equipment

• revenue income → the money that comes into the business from performing its day to day function — selling goods or providing a service

amount of money lent to a business or business owner from a bank or other financial insitutions

similar to a loan but tends to be for a larger sum of money and over a longer period of time (typically 25 years)

units of stock issued by a corporation that represents ownership

money invested in a business from the owners own personal savings

a medium to-long term sources of capital income

a fee paid to a salesperson in exchange for services in facilitating or completing a sales transaction. commission could be a flat fee or a percentage of the revenue, gross margin or profit generates by the sale. it could also be charged by brokers to assist in the sale of security e.g properties

assets bought from capital expenditure such as machinery and vehicles that will stay in the business for more than a year

something owned by the business that cannot be touched but adds value to the business e.g goodwill, patents, trademarks, brand name

a paper exercise to match the costs of an asset against time it is used within a business

money available to fund expenditure from within the business e.g retained profit, net current assets, sales of assets