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Read the information supplied and answer the questions which follow: Jim and Susan Doyle and their two children live in Limerick - Leaving Cert Business - Question 5 - 2011
Question 5
Read the information supplied and answer the questions which follow: Jim and Susan Doyle and their two children live in Limerick. Susan, who works as a nurse, has h... show full transcript
Worked Solution & Example Answer:Read the information supplied and answer the questions which follow: Jim and Susan Doyle and their two children live in Limerick - Leaving Cert Business - Question 5 - 2011
Step 1
Outline two benefits of preparing a household budget.
Answer
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Helps household to plan spending: A household budget allows Jim and Susan to plan their spending in line with their income. It assists in identifying areas where they might be overspending and enables them to allocate their financial resources effectively.
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Identifies times of high expenditure: Preparing a budget helps the Doyle family to identify times of the year when their expenses may spike, helping them to anticipate these periods and manage their finances better.
Step 2
Explain one advantage and one disadvantage of leasing.
Answer
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Advantage of leasing: Leasing allows the lessee to use an asset without the need for substantial upfront capital. For Jim, leasing a van would free up cash that can be better invested in establishing his painting/decorating business.
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Disadvantage of leasing: Leasing can ultimately be more expensive than purchasing an asset outright, as the total cost of leasing over time may exceed the cost of owning the asset.
Step 3
Step 4
Explain two of them.
Answer
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House/Buildings Insurance: This type of insurance provides financial protection against damage to the physical structure of the home due to events such as fire, storms, or theft. It ensures that the family can repair or rebuild their home if necessary.
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Contents Insurance: Contents insurance covers the belongings within the home, protecting against loss or damage from incidents like burglary or accidental damage. This ensures that the family can replace their personal possessions without bearing the full financial burden.
Step 5
Outline two advantages for Jim of setting up his own business.
Answer
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Financial potential: Jim can set his own pricing for services, which could potentially increase his income as a business owner compared to being an employee.
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Personal satisfaction: Running his own business will provide Jim with a sense of fulfillment and personal achievement as he works for himself and makes independent business decisions.
Step 6
Outline two difficulties Jim might face in setting up his own business.
Answer
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Financial risk: Jim may face challenges with initial investment costs and ensuring that his business is profitable. If it doesn't attract clients, he could incur losses.
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Operational challenges: Jim will need to manage all aspects of the business, from marketing to customer service. If he lacks experience in these areas, this could result in mismanagement and hinder business growth.
Step 7
Explain the terms 'gross pay' and 'net pay'.
Answer
- Gross Pay: This is the total amount earned by an employee before any deductions are made. It includes salary, bonuses, and any other forms of compensation.
- Net Pay: This is the amount an employee takes home after all deductions, including taxes and contributions to pensions or insurance, have been subtracted from the gross pay.