Money matters 1 Exercise 1:
Explain the differences between the words and expressions in bold in the following groups. - To lend and to borrow
Answer If you lend money, you let someone use your money for a certain period of time. If you borrow money, you take someone's money for a short time (usually paying interest – see number 19) and then repay it. (Note that you lend money to someone, and you borrow money from someone). - Inflation and deflation
Answer Inflation is a state of economy where prices and wages increase (= go up). Deflation is a reduction of economic activity. - A discount and a refund
Answer A discount is the percentage by which a full price is reduced in a shop (if the reduction is very big, we can say that it is a bargain). A refund is money paid when, for example, returning something to a shop (you will normally need to show a receipt when getting a refund – see number 8). Note that refund can also be a verb: to refund money. - Income and expenditure
Answer Income is the money you receive (your wage or salary is part of your income). Expenditure is money you spend. Most people would like their income to be greater than their expenditure. - To be insolvent and to be bankrupt
Answer If a company is insolvent, it has lost all its money. If a company is bankrupt, it has lost all its money , it has also borrowed a lot, and it cannot pay back its debts (= money it owes). Being bankrupt is a very serious financial situation for a company to be in. (Note that a company goes bankrupt, or is declared bankrupt in a court of law. Bankrupt can also be a verb: the current economic situation has bankrupted us) - A bank statement and a bank balance
Answer A bank statement is a detailed written document from a bank showing how much money has gone into and come out of a bank account. A balance is the amount of money you have in your bank account. - To be in the red and to be in the black
Answer If your bank account is in the red, your expenditure has been greater than your income (see number 4), and so you have less than $0 in your bank account. If your account is in the black, you have more than $0 in your bank account. - An invoice and a receipt
Answer An invoice is a note, or bill, sent to you to ask for payment for goods or services (it can also be a verb: to invoice someone for something). A receipt is a note (from a shop, for example) which shows how much you have paid for something. - To make a profit and to make a loss
Answer When you make a profit, you gain money from selling something which is more than the money you paid for it. When you make a loss, you have spent money which you have not gotten back. - Gross profit and net profit
Answer Gross profit is the profit you make before money is taken away to cover costs of production, labor, tax, etc. Net profit is the money you are left with after costs, taxes, etc., have been taken away (money which is taken away is called a deduction). - To be undercharged and to be overcharged
Answer If you have been undercharged, you have paid less than you should have for goods or services. If you have been overcharged, you have paid too much. - Something which is overpriced and something which is exorbitant
Answer Something which is overpriced is too expensive. Something which is exorbitant costs much more than its true value (we can also use the more informal word extortionate). - To save money and to invest money
Answer If you save money, you keep it so that you can use it later. If you invest money, you put it into property, stocks, etc., so that it will increase in value (the noun is investment). - A wage and a salary
Answer A wage and a salary are both money you receive for doing a job, but a wage is usually paid daily or weekly and a salary is usually paid monthly. - Extravagant and economical
Answer Extravagant describes someone who spends a lot of money. Economical (= frugal) describes someone who is careful with money. - A loan and a mortgage
Answer A loan is money that you borrow to buy something. A mortgage is a special kind of loan used to buy a house or other building over a period of time. - A loan and an overdraft
Answer A loan is money you borrow from a bank, and a formal arrangement has been made with the bank for this. An overdraft is the amount of money you withdraw from your bank, which is more than there is your account. It is usually done without making an arrangement with the bank (although many banks offer their customers automatic overdraft facilities). - Shares and stocks
Answer A share is one of the many equal parts into which a company's capital (= money that is invested in the company) is divided. People who buy them are called shareholders. A stock is an investment in a company represented by shares. (Note that in the United Kingdom, stocks are shares which are issued by the government). - Commission and interest
Answer Commission is the percentage of sales value given to a sales person in a company. Interest is the percentage that is paid to someone for lending money. - Something which is worthless and something which is priceless
Answer A worthless (= valueless) object is something which has no value. A priceless object is an extremely valuable object. - To credit and to debit
Answer When you credit an account, you put money into it. When you debit an account, you take money out of it. - A pension and redundancy pay
Answer A pension is the money that someone continues to receive after they have retired from a job. Redundancy pay is the money that is given to someone to compensate then for losing their job when a company makes them redundant (= no longer needed). (Note that if you lose your job and cannot find another one, you can receive welfare (= money from the government)). - A dividend and a royalty
Answer A dividend is part of a company's profits shared out among shareholders (see number 18). A royalty is money paid to the author of a book, an actor, a rock star, etc., as a percentage of sales (it is usually plural: Royalties are paid twice each year). - Tax and duty
Answer Tax is money taken by the government from incomes, sales, etc., to pay for government services. Duty is a special tax that has to be paid for bringing goods into a country (it is often called import duty). - To deposit money and to withdraw money
Answer If you deposit money in an account, you put money into the account. If you withdraw money, you take it out of your account. - A bill and a check
Answer A bill is a piece of paper showing the amount of money that you have to pay for goods or services (for example, an electricity bill). A check is a bill that you receive in a restaurant. Exercise 2:
Complete these paragraphs with appropriate words or expressions from Exercise 1. In some cases you will need to change the form of the word, and in some cases more than one answer may be possible. - The store is happy to exchange faulty goods, but it can only offer customers a on production of a valid .
- Customer: Excuse me, waiter. I think you've me. This says that my pizza cost $30.50. Waiter: That's correct sir. It's $25, plus a service charge of 10%, and government of 12%. Customer: Well I think that's an price to pay for a pizza!
- This month's bank shows that we have an of $800. We can't afford to be to such a large amount. It's time we reduced our .
- Our sales representatives receive a basic (pre-tax) annual of $20,000, plus a 10% for each item they sell. On average, their (post-tax) is around $45,000 a year.
- The company was declared after it was unable to pay off all its debts. Many people who lost their jobs as a result did not receive , and those who were about to retire lost half of their . People who had heavily in the company saw their become completely .
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