A budget is a plan of all the money coming in and all the money going out over a period of time. It is used to see what is left over at the end of a week or a month, and how long it would take to save up for something.

How do you work out how much someone has left at the end of a month?

Add up all the incomings , add up all the outgoings , then subtract the outgoings total from the incomings total. The difference is what is left over, and it is the amount available to save.

What might count as incomings in a personal budget?

Anything that brings money in, not just wages. Alongside net pay, that can include bonuses and any benefits a person receives, and all of them are added together before the outgoings are taken off.

How do you find how many months it will take to save a given amount?

Divide the amount needed by the amount saved each month. If the answer is not a whole number, round up , because a part-month of saving does not get you there.

True or False? A budget can show that someone is spending more than they earn.

True. If the outgoings total is larger than the incomings total, the subtraction gives a negative answer. Revealing that is one of the main things a budget is for, so a negative result is a finding rather than a mistake in the arithmetic.

How do you find the actual profit or loss on an item?

Subtract the total cost from the total revenue, and the size of the difference is the profit or the loss. Which of the two it is depends on which figure is larger, so it is worth naming it explicitly rather than leaving a bare number.

Define simple interest .

Simple interest increases savings by a constant amount , worked out from the sum originally invested. Because the original sum never changes, the interest earned is the same in every period, whether it is paid yearly or all at the end.

True or False? With compound interest you earn interest on interest you have already been paid.

True. The percentage is applied to the balance at the start of each year , and that balance already includes every payment of interest made so far. This is exactly what separates compound interest from simple interest, where only the original investment ever earns.

What are the two ways of finding the final value of a compound interest account?

Either work year by year, finding the interest earned and the new balance each time. Or find the multiplier, raise it to the power of the number of years, and multiply by the amount invested, which gets there in one calculation.

Define payment plan .

A payment plan is a way of paying for something in parts over time rather than all at once. It typically involves a deposit paid up front, a number of equal monthly instalments, and sometimes a fixed final payment.

What forms can borrowing money take?

Borrowing can take the form of a loan, a credit card or store card, or a credit agreement. Interest is payable on all of them, which is why borrowing always costs more than the amount taken out.

How do you find the size of each monthly instalment on a payment plan?

Find the total price of the plan, subtract the deposit and any final payment, then divide what is left by the number of months. The deposit and final payment have to come off first, because they are not part of what the monthly instalments are covering.

True or False? The total cost of buying an item on a payment plan is the same as its advertised price.

False. A payment plan almost always costs more, because the money is effectively being borrowed and interest is charged for that. The instalments therefore have to add up to more than the ticket price, not to the ticket price itself.

National 5MathsSQAApplications of MathematicsFlashcardsFinancial SkillsIncomings & Outgoings

Incomings & Outgoings (SQA National 5 Applications of Mathematics): Flashcards

Exam code: X844 75

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Define budget.
A budget is a plan of all the money coming in and all the money going out over a period of time.
It is used to see what is left over at the end of a week or a month, and how long it would take to save up for something.
How do you work out how much someone has left at the end of a month?
Add up all the incomings, add up all the outgoings, then subtract the outgoings total from the incomings total.
The difference is what is left over, and it is the amount available to save.
What might count as incomings in a personal budget?
Anything that brings money in, not just wages.
Alongside net pay, that can include bonuses and any benefits a person receives, and all of them are added together before the outgoings are taken off.
Tia's monthly net pay is £2400, and her expenses are rent £800, travel £300, gas and electricity £115 and food £245. How much is left?
Tia has £940 left each month.
Her expenses come to $\pounds 800 + \pounds 300 + \pounds 115 + \pounds 245 = \pounds 1460$ .
Taking that off her net pay gives $\pounds 2400 - \pounds 1460 = \pounds 940$ .
How do you find how many months it will take to save a given amount?
Divide the amount needed by the amount saved each month.
If the answer is not a whole number, round up, because a part-month of saving does not get you there.
True or False?
Someone who needs £450 and saves £120 a month will have enough after 3 months.
False.
After 3 months they would have only $3 \times \pounds 120 = \pounds 360$ , which is short of the £450.
Since $\pounds 450 \div \pounds 120 = 3.75$ , they need a fourth month.
True or False?
A budget can show that someone is spending more than they earn.
True.
If the outgoings total is larger than the incomings total, the subtraction gives a negative answer.
Revealing that is one of the main things a budget is for, so a negative result is a finding rather than a mistake in the arithmetic.
Complete the two terms:
A $______$ is made when an item is sold for more than it cost, and a $______$ is made when it is sold for less than it cost.
The completed sentence is:
A profit is made when an item is sold for more than it cost, and a loss is made when it is sold for less than it cost.
A painting bought for £12,000 and sold for £15,000 makes a profit; a house bought for £120,000 and sold for £110,000 makes a loss.
How do you find the actual profit or loss on an item?
Subtract the total cost from the total revenue, and the size of the difference is the profit or the loss.
Which of the two it is depends on which figure is larger, so it is worth naming it explicitly rather than leaving a bare number.
True or False?
A percentage profit is worked out as a fraction of the selling price.
False.
It goes over the cost price, the amount that was actually paid for the item.
A game bought for £20 and sold for £17 is a £3 loss, and $\frac{3}{20} \times 100 = 15$ , so it is a 15% loss rather than anything measured against the £17.
Abe buys apples for 25p each and sells them for 37p each. What is the percentage profit?
The percentage profit is 48%.
The profit on one apple is $37 - 25 = 12$ pence.
Putting that over the buying price gives $\frac{12}{25} \times 100 = 48$ .
Abe buys oranges for 40p each and wants to make 35% profit. What should he sell them for?
He should sell them for 54p each.
A 35% profit means increasing the buying price by 35%, which uses the multiplier 1.35.
That gives $1.35 \times 40 = 54$ pence.
A trader buys 200 apples at 25p each and sells them all at 37p each. What is the total profit?
The total profit is £24.
Each apple makes 12p, so 200 of them make $200 \times 12 = 2400$ pence.
Profit scales with the number of items, which is why the note works in total revenue and total cost rather than one item at a time.
Define simple interest.
Simple interest increases savings by a constant amount, worked out from the sum originally invested.
Because the original sum never changes, the interest earned is the same in every period, whether it is paid yearly or all at the end.
True or False?
With compound interest you earn interest on interest you have already been paid.
True.
The percentage is applied to the balance at the start of each year, and that balance already includes every payment of interest made so far.
This is exactly what separates compound interest from simple interest, where only the original investment ever earns.
An account guarantees £70 interest for every £1000 invested. How much interest does £6000 earn?
It earns £420 in interest.
There are $\pounds 6000 \div \pounds 1000 = 6$ lots of £1000 in the investment.
Each lot earns £70, so the total is $6 \times \pounds 70 = \pounds 420$ .
What are the two ways of finding the final value of a compound interest account?
Either work year by year, finding the interest earned and the new balance each time.
Or find the multiplier, raise it to the power of the number of years, and multiply by the amount invested, which gets there in one calculation.
James invests £4000 for 3 years, choosing between £70 interest per £1000 invested and 2% a year. Which is worth more?
The £70 per £1000 option is worth more, at £4280 against £4244.83.
That option gives $4 \times \pounds 70 = \pounds 280$ of interest, bringing the total to £4280.
The 2% option gives $\pounds 4000 \times 1 . 02^{3} = \pounds 4244.83$ , so the higher-sounding rate is not automatically the better deal.
£1000 is invested at 3% compound interest a year, and after one year the balance is £1030. Complete the second year:
$3 % of \pounds 1030 = \pounds______, so the balance becomes \pounds______$
The completed second year is:
$3 % of \pounds 1030 = \pounds 30.90, so the balance becomes \pounds 1060.90$
The first year earned exactly £30, so the extra 90p is the interest paid on the first year's interest.
Define payment plan.
A payment plan is a way of paying for something in parts over time rather than all at once.
It typically involves a deposit paid up front, a number of equal monthly instalments, and sometimes a fixed final payment.
What forms can borrowing money take?
Borrowing can take the form of a loan, a credit card or store card, or a credit agreement.
Interest is payable on all of them, which is why borrowing always costs more than the amount taken out.
How do you find the size of each monthly instalment on a payment plan?
Find the total price of the plan, subtract the deposit and any final payment, then divide what is left by the number of months.
The deposit and final payment have to come off first, because they are not part of what the monthly instalments are covering.
A snooker table is advertised at £900, the plan costs 15% more, and the deposit is $\frac{1}{6}$ of the advertised price. How much is the deposit?
The deposit is £150.
It is a fraction of the advertised £900, not of the £1035 the plan actually costs, so it is $\pounds 900 \div 6 = \pounds 150$ .
Read which price each part of a payment plan is based on, because a question will often switch between the two.
True or False?
The total cost of buying an item on a payment plan is the same as its advertised price.
False.
A payment plan almost always costs more, because the money is effectively being borrowed and interest is charged for that.
The instalments therefore have to add up to more than the ticket price, not to the ticket price itself.
Complete the two ways a question can give the extra cost of a payment plan:
It is given either as a fixed amount of $______$ to add on to what is borrowed, or as a $______$ by which the advertised price is increased.
The completed sentence is:
It is given either as a fixed amount of interest to add on to what is borrowed, or as a percentage by which the advertised price is increased.
The first is an addition and the second is a multiplication, so check which one the question is describing before starting.
A payment plan totals £1035, with a £150 deposit, a £125 final payment and 8 equal monthly instalments. What is each instalment?
Each instalment is £95.
Taking the deposit and final payment off leaves $\pounds 1035 - (\pounds 150 + \pounds 125) = \pounds 760$ .
Spreading that across the 8 months gives $\pounds 760 \div 8 = \pounds 95$ .

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