LIBF Level 2 Unit 1: Personal Financial Encounters Test C

An important characteristic of money is that it must be:

• available in one amount only.
• easily recognisable.
• indestructible.
• inflation proof.

Answer explanation

A

Money needs to be available in different amounts so you can buy things of different values and give change.

B

Correct.

C

Money is not indestructible.

D

Money is not inflation proof.

Which of the following is not a reason that Bank of England banknotes have security features on them? To make them:

• accepted by others.
• difficult to copy.
• look like other currencies.
• recognisable.

Answer explanation

This is not a valid reason to include security features.

In the UK, which of the following amounts in coins is not legal tender?

• 20p in 1p coins.
• 30p in 2p coins.
• £4 in 5p coins.
• £5 in 10p coins.

Answer explanation

Any amount in excess of 20p in 2p coins is not considered to be legal tender.

Which of the following is not likely to be a regular source of income for someone in their mid-20's?

• Earned salary.
• Jobseeker's Allowance.
• National Lottery winnings.
• Pension income.

Answer explanation

This is not likely to be a regular (or reliable) source of income.

Roxy runs her own art gallery. She works there 09.00-17.00 Monday to Friday and 10.00-13.00 on Saturday and Sunday. Roxy is:

• a casual worker.
• an employee.
• part-time.
• self-employed.

Answer explanation

Roxy is self-employed.

What do the letters 'SSP' on a payslip stand for?

• Sickness Security Payments.
• Social Security Payment.
• Social Security Protection.
• Statutory Sick Pay.

Answer explanation

They mean Statutory Sick Pay.

Which of the following is true in respect of UK income tax? The amount of income tax you will pay directly depends on:

• how much you earn.
• how much you spend.
• the kind of job you do.
• where you live.

Answer explanation

The amount of income tax you pay depends on how much you earn.

Direct debits are most commonly paid from which type of account?

• Credit.
• Current.
• Debit.
• Savings.

Answer explanation

Direct debits are most commonly paid from a current account.

Which of the following statements regarding overdrafts is true? They:

• are directly linked to credit cards.
• are ideal for long-term financing.
• are intended for temporary lending.
• have fixed monthly repayments.

Answer explanation

A

Overdrafts are intended for short-term finance and are not linked to credit cards.

B

A product such as a personal loan is more appropriate for long-term financing.

C

Correct.

D

Overdrafts are intended for short-term finance, and do not have fixed monthly repayments.

Regular monthly payments for variable amounts are best paid by:

• debit card.
• direct debit.
• online transfer.
• standing order.

Answer explanation

These payments are best suited to direct debits.