1. Introduction to Business Chapter 29
Fundamentals of Credit
Essential Question: How is credit important to our economy?

2. Objectives:
1.2 Business Environment (C): Students will understand the development and structure of business environments. They will demonstrate competency by identifying the dynamic components of business structure and its relationship to the global business environment.
1.2.2 Business Law–describe the sources of law, the structure of the court systems and ways in which these laws apply to basic consumer and business transactions.
1.2.4 Competitive Environment–explain the economic effects of competition on a business in an international marketplace.
1.2.8 Interrelationships of Business Operations–discuss the interrelationships between different business lines as they relate to finance, tax, operations, human resources, marketing, production, management, and the legal environment.
1.4 Economics and Financial Concepts (C): Students will understand the impact of global and domestic businesses, financial concepts, and integrated business models. They will demonstrate competency by using appropriate technology and other resources to solve business problems.
1.4.1 Business/Financial Relationships–analyze the financial implications of various functions of a business and describe how they interrelate
1.4.2 Demographics–interpret demographic data and explain its impact on the economy.
1.4.3 Economic Culture–explain how culture affects economic practice and business ethics

3. Chapter Objectives Explain what credit is and how it is used.
Distinguish loan credit, sales credit, and trade credit.
Discuss how credit is granted, including the three C’s.
Cite advantages and disadvantages of using credit.

4. What credit is
p.399
Credit is the privilege of using someone else’s money with the obligation to repay it at a future time.

5. Types of Credit
p. 400
Consumers use credit to buy cars, clothing, and furniture’
Businesses use credit to finance new equipment, expand facilities, and to take care of temporary cash needs.
Governments borrow money to build roads and schools.

6. Users of credit
p.400
You can borrow money from a financial institution – loan credit.
You can charge a good or service at the time of purchase -- sales credit.
A business can receive goods now and pay for them later –trade credit.

7. Granting of credit p.401 a. A business considers a person’s:
Character (honesty and willingness to pay debts).
Capacity (the ability to pay debts).
Capital (the value of the person’s possessions).

8. Benefits of credit p. 402 Credit used wisely
Makes some buying more convenient.
Gives the purchaser immediate possession rather than waiting until later.
Allows buyers to take advantage of special sales.
Establishes a person’s credit rating.

9. Precautions for use of credit p. 404
Credit is misused if it results in:
Overbuying.
Careless buying.
Paying higher prices in stores that grant credit.
Incurring excessive debt.

10. Questions to ask p. 405 How am I benefiting from this use of credit?
Is this the best buy I can make or can I shop around?
What will be the total cost of my purchase, including the cost of charging?
What would I save if I paid cash?
Will the payments be too high considering my income?

11. Assignments
Do Now
Monday--Calculate Business Data p.408 #31
Tuesday--Calculate Business Data p.408 #32
Wednesday--Calculate Business Data p.408 #33
Read example and calculate answer in an Excel spreadsheet, show your work. Give a short explanation as to your answers.
Workshop Discussion
Communicate Business Concepts questions p
Discuss questions with your group and write a brief answer to both questions

12. Homework Define Key Terms Develop your Business Language 407.
Answer Review your reading questions p.406.
The Resume Handbook for High School Students.