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
      • means of borrowing
        • delaying the payment = paying in instalments over a period of time
          • have to pay interest on that
    • considerations when using money
      • purchasing power and time
        • inflation = reduces purchasing power
        • bank account with interest rate higher than inflation = increases purchasing power
    • using money to meet changing needs
      • money used for making payments, saving, borrowing and recording value


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