topic 1 - purposes of money (2)
- Created by: Hetal M
- Created on: 04-10-17 16:10
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- Topic 1 - Purposes of money
- functions money must perform
- unit of account
- a measure used in accounting and bank statements to record transactions
- compare goods and places a value on items
- means of exchange
- money = payments = buying an item with money
- legal tender = when only certain coins and notes are accepted
- e.g. bank of England currency used only in England and Wales
- store value
- storing it as financial value for future use
- e.g. banks and assets
- storing it as financial value for future use
- means of borrowing
- delaying the payment = paying in instalments over a period of time
- have to pay interest on that
- delaying the payment = paying in instalments over a period of time
- unit of account
- considerations when using money
- purchasing power and time
- inflation = reduces purchasing power
- bank account with interest rate higher than inflation = increases purchasing power
- purchasing power and time
- using money to meet changing needs
- money used for making payments, saving, borrowing and recording value
- functions money must perform
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