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Read the information supplied and answer the questions which follow - Leaving Cert Business - Question Question 1 - 2014
Question Question 1
Read the information supplied and answer the questions which follow. Sanders Household Linda and Paul Sanders live in their own home with their two children. Linda... show full transcript
Worked Solution & Example Answer:Read the information supplied and answer the questions which follow - Leaving Cert Business - Question Question 1 - 2014
Step 1
Outline two types of insurance the Sanders household might have.
Answer
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House/Buildings Insurance: This type of insurance provides compensation and protection if the structure of the house is damaged due to fire, flood, or storm. It ensures that the home can be repaired or rebuilt, safeguarding the family’s asset.
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Contents Insurance: This covers losses or damage to personal belongings within the home, protecting against theft, fire, or water damage. This would be crucial for the Sanders household as they have children and valuables.
Step 2
Outline two reasons why the Sanders household would prepare a Household Budget.
Answer
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To Plan Future Income and Expenditure: By preparing a household budget, the Sanders can track their income against expenses to ensure they do not overspend, which is particularly important given their current overdraft situation.
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To Identify Needs and Make Plans: A household budget allows the Sanders to plan for necessary expenses, such as saving for a second car and ensuring they can meet other financial responsibilities without falling into further debt.
Step 3
Outline two factors the Sanders household must consider before taking out a medium term bank loan.
Answer
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Interest Rates and Terms: The Sanders must consider the interest rates associated with the loan and the overall terms that govern the repayment period. Understanding the APR will help them gauge the long-term financial impact.
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Current Financial Commitments: They need to assess their current financial situation, including their overdraft and other liabilities, to ensure they can manage the repayment of the new loan alongside existing debts.
Step 4
Explain three features of a Current Account.
Answer
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ATM/Debit Card Accessibility: A current account typically provides an ATM or debit card, allowing account holders to withdraw cash easily and make purchases directly from their account.
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Overdraft Facility: Many current accounts offer an overdraft which provides extra funds on a temporary basis. This is useful for unexpected expenses but can lead to fees if not managed properly.
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Direct Debits and Standing Orders: Current accounts facilitate automatic payments via direct debits or standing orders, providing a convenient way for the Sanders to manage recurring payments such as utility bills and mortgage repayments.
Step 5
Outline one similarity and one difference for Linda between managing her office and managing her home.
Answer
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Similarity: Both roles require effective planning and cash flow management. In her office, Linda must ensure that income and expenses are balanced, similar to how she must manage her household budget to cover costs and avoid overspending.
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Difference: The scope of financial obligations differs; managing her office entails broader financial management across multiple business expenses and revenues, while managing her home focuses more on personal finances, household needs, and family welfare.