Level 3 Unit 3 Personal and Business Finance

What are the functions of money?

• The currency used by the Bank of England

• A way of organsing your debt payment

• It is your spending money.

• Means of exchange and store of value

What influences your view of money?

• Your job

• Your salary

• Life stages and life events

• The overdraft on your credit card

How does culture affect or influence your view of money?

• Your background, your religious belief or ethical principles may shape your view of money.

• It does not influence it in any way.

• Moving home affects culture.

• Interest rates can have an influence.

Why should you plan expenditure?

• You maintain a good credit rating and avoid getting into debt.

• You cannot control your costs.

• It helps you become bankrupt.

• It creates savings for your family.

A good credit rating allowing you to borrow money is a benefit of planning expenditure.

• True

• False

A risk of not planning is ....

• Money will continue to earn interest.

• Not being able to save for the future.

• You can manage money to fund purchases.

VAT is charged on most goods and services.

• True

• False

Straight line depreciation is ...

• annual depreciation = (estimated useful life of asset - estimated salvage) / asset purchase price

• annual depreciation = (asset purchase price - estimated salvage value)/estimated useful life of asset

• annual depreciation = (estimated salvage - asset purchase price) / estimated useful life of asset

What is inventory turnover?

• The average number of days debtors take to pay their invoices.

• The average number of days a business holds its stock

• The average number of days the business takes to pay its suppliers

The formula for inventory turnover is

• (average inventory/cost of sales) x 365

• (trade payables/credit purchases) x 365

• (trade receivables/credit sales) x 365