BTEC Business- Unit 3 Finance revision exam

Cash

Money in the form of bills or coins

Debit card

A card used to withdraw money from a bank account

Credit card

A card authorizing the holder to buy goods and services that can be paid for later.

Cheque

A written instruction to your bank to pay a sum of money to another person from your current account

Electronic transfer

The transfer of funds from one account to another via the internet or telephone

Direct debit

An electronic payment out of an account. The amount and frequency of a direct debit payment can vary

Standing order

n. an instruction to a bank to make regular payments

Contactless card

Cards containing antennae allow money to be transferred when the card touches a contactless terminal

Store card

a credit card which can only be used to buy goods in one particular shop or chain of shops

Mobile banking

apps that allow online banking access from devices such as smart phones, tablets, etc.

BACS

Bankers Automated Clearing Services

CHAPS

Clearing House Automated Payments System

Standard current account

Account with full banking facilities

Premium current account

An account with a fee entitling the user to extra services

Basic current account

Account with limited facilities usually used by someone with a poor credit rating

Student account

Account designed to assist young people to become prudent with their personal finances

Overdraft

Occurs when money is withdrawn from a bank account and the available balance goes below zero

Personal loan

Not backed up by collateral. Also known as an unsecured loan

Hire purchase

The buying of equipment by paying in instalments, usually including interest.

Mortgage

A payment, usually monthly, applied to the balance of a home loan used when purchasing housing

Payday loan

a high interest loan where money is borrowed against a future paycheck

ISA

Individual savings account

DSA

Deposit and savings account

Premium bonds

Government scheme allowing individuals to save a set amount in return for being entered into prize draw monthly

Gilts

Bonds issued by the UK government.

Shares

an individual buying ownership of a corporation

Pension

A sum of money paid regularly by a company to someone who has retired or has a disability

Car insurance

a type of insurance that covers any damage you may cause to another person or their vehicle

Home insurance

Insurance covering the building and contents owned by an individual

Life insurance

Insurance that provides death benefits to the survivors of the insured.

Travel insurance

insurance meant to cover expenses over trips

Health insurance

helps people pay for medicine and doctors when they are sick or hurt

Bank of England

The UKs central bank responsible for maintaining financial stability in the UK

Banks

An organisation that stores money on behalf of its customers

Building society

Organisation that stores money on behalf of customers- customers are members

Credit union

Credit unions are not-for-profit savings and lending financial institutions, owned by its members

NS&Is

National savings and investments

Pawnbrokers

legal business where loans are made based on the value of merchandise used as collateral

Branch banking

Going into the branch to make a financial transaction

Online banking

Making financial transactions online

Telephone banking

Making financial transactions over the phone

Citizens advice

Organisation offering advice on a range of issues

Independant financial advisor

Professional offering independant advice on financial issues

Price comparison site

Website offering comparisons of financial benefits

Debt counseller

Professional offering advice on dealing with debt

Capital income

any form of payment that derives from owning physical or financial capital

Revenue income

Income from the goods in which the business trades

Expenditure

An amount of money spent.

Non current assets

Assets owned by a business that it expects to retain for one year or more

Current assets

Cash and other assets expected to be exchanged for cash or consumed within a year

Retained profit

Profit which is kept back in the business and used to pay for investment in the business.

Sale of assets

when a business sells off its unwanted or unused assets to raise funds

Crowd funding

Using social networking to appeal to potential investors

Loans

amounts of money borrowed which will accumulate interest

Venture capital

Invested money used for new business opportunities

Debt factoring

The sale of a business' invoices to a third party.

Trade credit

The practice of buying goods and services now and paying for them later

Grant

A sum of money or other payment given for a particular purpose

Donation

Money given to charity

Break even point

point at which total revenue and total cost are equal

Fixed costs

Costs that do not vary with the quantity of output produced

Total costs

Fixed costs + variable costs

Variable costs

Costs that vary directly with the level of production

Selling price

the price paid by the customer for the product.

Cash flow forecast

A projection, usually by week or month, of the likely cash inflows and outflows in a business

Opening balance

The amount of money in a business at the start of the month

Closing balance

Opening balance + net cash flow

Depreciation

A decrease or loss in value

Liquidity

Availability of resources to meet short-term cash requirements.

Straight line depreciation

A constant amount of depreciation is subtracted from the value of the asset each year

Reducing balance depreciation

Reducing the value by a certain percentage, making depreciation less each year

Gross profit margin

Ratio of gross profit to net sales.

Mark up

The amount added to the cost of a product to set the selling price.

Net profit margin

Ratio of net income (gross sales minus expenses and taxes) to net sales.

Return on capital employed

Net profit / capital employed x 100

Current ratio

Current assets/current liabilities

Trade receivable days

The amount of time it takes debtors to pay bills

Trade payable days

The amount of time it takes creditors to pay bills

Inventory turnover

COGS/average inventory