Fig. 3.1 shows part of an internet banking statement for Sam Jacobs. STATEMENT 80-29-47 25749813 Opening balance $1700.00 Overdraft limit $50.00 Make a payment Make a transfer Date Transaction In () Out () 2 October Rent (SO) 400.00 3 October Electricity (DD) 70.00 4 October Cash 150.00 25 October Salary 1600.00 28 October Car Sales Ltd 3000.00 31 October Closing balance -$20.00 OD Fig. 3.1 Internet banking statement Use Fig. 3.1 to help you answer the following questions.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. [1] Standing order/Stop order
2. [1] $70 paid/debited from bank account
3. [1] for electricity
4. [1] using direct debit
5. [1] by a creditor
6. [1] Yes - Allows him to be able to pay for the car
7. [1] as he needed to be overdrawn by $20 to do this
8. [1] can now make further small payments
9. [1] in emergencies
10. [1] up to another $30
11. [1] and it will cost him less in charges/interest if he has an agreed limit
12. [1] can be cheaper than taking a loan
13. [1] will stop him spending more than $50
14. [1] No - he would be likely to exceed a $50 limit/spend more than $50
15. [1] as he has greater payments than $50 on his bank statement
16. [1] e.g. for expenses such as petrol/food
17. [1] this would then lead to higher bank charges/interest if he goes over the overdraft limit
18. [1] and overdraft can be called in any time by the bank
19. [1] or lower the overdraft limit
20. [1] might be cheaper to ask for a loan
21. [6] Up to 2 marks for describing motor insurance cover
22. [2] Car insurance is a legal requirement and there are three levels of cover Sam can choose from:
23. [1] Third party is the minimum required by law; it covers injuries to other people and damage to other people's property, but not to the policy holder.
24. [1] Third party, fire and theft is the same as third party but also covers the cost of repairs or replacement if Sam's car is stolen or damaged by fire.
25. [1] Comprehensive motor insurance protects against any damage to Sam's car as well as any damage to other people's property, so is the most expensive.
26. [2] Up to a further 2 marks for analysing the importance of adequate motor insurance
27. [1] If Sam under-insures his car, he will have saved money by paying lower premiums, but it will result in him not being able to recover his losses. If he over-insures, he will be paying too much when, ultimately, he can only recover the car's value.
28. [2] Up to a final 2 marks for evaluating the importance of having adequate motor insurance
29. [2] Evaluation example: It is most important that Sam has adequate insurance to be legal and that others will be compensated for any loss. He should not under-insure or over-insure by paying incorrect premiums as he is likely to lose money in the long term. The insurance company will only pay back the amount that he has lost. He cannot gain a profit from a loss.