SENIOR HIGH SCHOOL

First Semester S.Y. 2020-2021

MODULE 10
BUSINESS FINANCE

Name: _______________________________ Date :__________

Grade/Section: ________________________ Week : 10
Track/Strand: _________________________

THE CONCEPT AND DEVELOPMENT OF MONEY

WHAT IS THIS ALL ABOUT?

Man’s civilization has advanced by leaps and bounds, creating the need for money. In
early years of civilization, there was no need for money. People simply exchanged what they
had for what they wanted. This exchange is termed “barter”. Nowadays, money is important. If
one has money, he can buy house, car, land, etc. As the saying goes, money talks.

WHA T DO YOU EXPECT TO LEARN?

Content Standard:
The learners demonstrate understanding of the:
1. basic concepts of money.

Performance Standard:
The learners should be able to:
1. distinguish the different type money; and
2. describe the characteristics of a good medium exchange.

Objectives:
After the lesson, the learners should be able to:
1. define money;
2. distinguish money from barter; and
3. list down its characteristics.
PRELIMINARY ACTIVITY

Differentiate our generation today from the generation yesterday? Can you live without
money? Expound your answer.

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ORIGIN OF MONEY
 Money was derived from the Latin word “moneta” surname of the Roman goddess
Juno. Money refers to a mint or a place for coining money. According to etymonline.com, it also
comes from the old French monoie and the Modern French monnaie, meaning money, coin,
currency, or change. Relative to the

Money is defined by Meriam-Webster as something generally accepted as a medium of

exchange, a measure of value or a means of payment. Money is commonly defined as anything
authorized by law to be generally accepted as legal tender, as a medium of exchange, and a
standard of payment of goods and services.

From the foregoing definition of money, it can be noted that money is:
1. medium of exchange
2. legal tender
3. measure of value
4. means of payment
5. standard of value

BARTER

Barter is defined as the exchange of things for other things. In the early societies, the
goods used as proto-money, that is, commodities acceptable to everyone engaged in trading.
These goods are called commodity money. They had values assigned by those using them, but
they also had intrinsic value- the value of the goods because of their usefulness.

COINAGE

Coinage is the conversion of metals into coins. The place where metals are made into
coins is known as mint.
Coin is an ingot of metal, the weight and fineness of which are certified by the integrity
of the design on its surface and the power of the issuing authority.

With the government’s sole authority to mint coins and print bills, the following basic
purposes are assumed:
1. prevent confusion
2. ensure uniformity and fineness
3. facilitate exchange
4. ensure confidence on the part of the citizenry with respect to the government’s
monetary system

KINDS OF COINAGE

Laman and Laman (2007) cited the following types of coinage:

1. Free Coinage or Gratuitous Coinage

This system whereby metals may be brought to the government mint and converted into
standard money without any charge for minting except for the delay involved in the process.

2. Brassage
This is the kind of coinage where the fee charged by the government to mint metals into
coin is just sufficient to cover the cost of mining. The government does not earn anything.

3. Seigniorage
 This is the kind of coinage where the fee charged by the government is more than the
cost of minting so the government earns a profit.

4. Limited Coinage
This type of coinage is one wherein the government converts metals into coins only at its
option. The government buys precious metals in the open market and mints them as coin
money or the standard medium of exchange at face value higher than the material content to
facilitate trade.

PAPER MONEY

The Chinese invented printing and use of paper money during Tang Dynasty (618-906
AD). Mongolia was the second country to begin using paper money in the 11 th century. Paper
money can be called representative money, following the long use of commodity money (referring
to the use of commodities like gold and silver which have intrinsic value).

PLASTIC (POLYMER) MONEY

Plastic money is actual cash made of super-resistant polymer film (instead of paper).
Polymer money feels like regular paper bill but lasts longer. Polymer is more durable, harder
to counterfeit and environment-friendly.

PLASTIC MONEY

Credit card
Credit card allows owners to buy products on credit from different stores and
establishments, except that it has a credit limit that is the maximum amount that can be charged
to the credit card.

Debit Card
The bank where the account is maintained issues the debit card. The overdraft line refers
to the credit (up to a certain limit) granted by the bank to the holder of the card.

Cash Card
Cash card only allows withdrawal of money through an Authorized Teller Machine
(ATM). In short, it is used for ATM transactions only. A cash card can be used as a debit card as
well.

Prepaid Cash Card

1. Gift card/Certificate
Gift card is a prepaid cash card that can be given as gift so that recipients can choose
what they want as a gift.

2. Store Card
Store card is like a credit card, generally issued by a particular store and can be used for
purchase in the same store.

3. Multi-currency Prepaid Card

It can load up to six different currencies- US dollar, Euro, British pound, Hongkong
dollar, Australian dollar and Japanese Yen.
BARTER EXCHANGE AND BARTER CARD

Advancement in technology and online networking have facilitated the formation of the
so-called Barter Business Exchange which is a network of business owners who want to trade
products and services to increase sales.

FUNCTIONS OF MONEY

1. Medium of exchange
The use of money to facilitate the transfer of goods and services and settle obligations
has made money the basic medium of exchange.

2. Standard of Value
Money is our measuring stick to measure the value worth of something.

3. Store of Value
The excess of income over expenses is usually saved. The value needed in the future is
saved.

4. Means of Deferred Payment

As legal tender, money is acceptable in payment of debts or liabilities. Deferred means
postponed or held for future use.

5. Conveyance
Conveyance refers to the mean of transport or transfer. It means the process of or the
documents effecting the transfer of property from one owner to another.

FORMS OF MONEY

1. Commodity Money
When things are used to get what we want, be it goods or services, the things we used to
pay for such may be termed commodity money. Commodity money has its own value other
than using it as money. Shells can be used as ornament; cattle can be used for farm help or can
be raised to produce meat; and metals have value or can be used as tools. Commodity, as such
has its own intrinsic value, the value of the commodity itself. A cow has value, and shells like
cowries have value. Therefore, they are considered commodity money.

2. Currency (Bills and Coins)

The government of any country issues currency that is legal tender in the country. These
the bills central and coins bank are of in a different country. Domestic denominations currency
(the can divisibility only be feature), used in its minted country and of printed, origin.

3. Check

Check is generally used by businesses and persons in conducting business, as well as

personal transactions. It is a written order to a bank (drawee), by the person, who issues the
check (maker or drawer) to pay someone whose name is written on the face of the check (payee)
a certain amount of money on demand (upon presentation/immediately) or at a future date
(post-dated check). Examples of a check are shown on the next page.

THE DIFFERENT TYPE OF CHECKS ARE:

a. Personal check
 It is issued by persons to be drawn against their own current/checking account.

b. Business Check

Business check is a check issued by companies/businesses. It is drawn on the issuer)

bank checking or current account. It is used for business transactions.

c. Cashier's Check/Manager's Check

Treated as a bank draft, cashier’s check is issued by the bank against its own account)
ensuring availability of funds. It is to be purchased with a fee from a bank that issues
check.

d. Certified Check

Certified check is like a cashier's check. However, it is issued by the bank certifying that
the account of the person issuing it has available funds (just like an ordinary personal
check). The bank certifies the availability of fund by earmarking corresponding amount
on the check which will only be used to pay the check itself Certified check clears or
negotiates faster and is easier to encash than personal checks.

CHARACTERISTICS OF A GOOD MEDIUM OF EXCHANGE

1. Scarcity makes something valuable, and over-abundance makes it worthless. Scarcity means
rare or hard to find.

2. Divisibility refers to the quality of being broken down into smaller units.

3. Portability or ease of handling or carrying makes one thing desirable as a medium of

exchange.

4. Durability means long lasting.

ASSESSMENT

I. IDENTIFICATION
Write your answers in the space provided before the number.
_______________1. Medium of exchange, standard of value, legal tender
_______________2. Exchange of goods for other goods.
_______________3. Converting metals into coins.
_______________4. An ingot of metal.
_______________5. The most common plastic money.
_______________6. Another name for ATM card.
 _______________7. Gift certificates and gift cards are example of these.
_______________8. Started the use of money.
_______________9. Fee charged for the process of minting without profit
_______________10. It means rare to find.

II. ENUMERATION

Explain each briefly!

1-5 Functions of money

1. _________________________

2. ________________________

3. ________________________

4. ________________________

5. ________________________

1-5 Types of money

1. _________________________

2. ________________________

3. ________________________

4. ________________________

5. ________________________

III. ESSAY
Write your answer on the space provided.
Rubrics:
Content/Relevance 40%
Grammar 40%
Neatness 20%
Total 100%
1. Discuss how barter exchange works.

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2. Discuss the pros and cons of the use of credit card.

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FEEDBACK

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REFERENCE

Dr. Flores, M. (2016). Business Finance for Senior High School. Unlimited Books & Publishing
Inc., Room 215 ICP Bldg., Cabildo ST., Intramuros, Manila.

Norma Dy Lopes-Mariano, Ph.D. Elements of Finance (2014 edition). Rex Book Store, Inc., 856
Nicanor Reyes, Sr. St., Manila, pages 1-28.