introduction to business, checking accounts why it’s important paying with checks is the most...
TRANSCRIPT
ChapterChapter 2929
Introduction to Business, Checking Accounts
Why It’s ImportantWhy It’s Important
Paying with checks is the most common and safest medium of exchange.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Opening an AccountOpening an AccountChecking accounts are sometimes called demand deposits because each check a customer writes is an order to the bank to release money from the account on demand.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Types of AccountsTypes of Accounts Most banks offer several types of checking accounts.
A wise consumer investigates all the kinds of accounts available, as well as their advantages and costs.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Regular AccountRegular Account A regular checking account is designed for customers who write a few checks each month and don’t keep a minimum amount of money in the account.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Regular AccountRegular Account Some accounts require a minimum balance.
If the balance falls below the minimum, a service charge is deducted from the account.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Interest-Bearing AccountInterest-Bearing Account An interest-bearing account is a checking account that earns interest on your account’s balance.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Interest-Bearing AccountInterest-Bearing Account An interest-bearing account usually has a minimum balance requirement with an unlimited number of checks allowed each month.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Interest-Bearing AccountInterest-Bearing Account The minimum balance might be much higher than for a regular checking account.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Joint AccountJoint Account A joint account is an account shared by two people who are equally responsible for the account.
With a joint checking account, either person can write checks on the account.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Figure29.1 TYPES OF CHECKING ACCOUNTS
This chart shows the different types of checking accounts available at one bank.
Which type of account requires the smallest amount of money to open?
ChapterChapter 2929
Introduction to Business, Checking Accounts
Signature CardSignature Card A signature card is a record of your signature used by the bank to verify your identity.
The signature card helps prevent other people from cashing your checks.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Signature CardSignature Card The signature you put on your card is the same one you have to use when you sign your checks.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Fast Review
1. What is an advantage and a disadvantage of an interest-bearing account?
2. What is the main purpose of a signature card?
ChapterChapter 2929
Introduction to Business, Checking Accounts
Overdraft ProtectionOverdraft Protection One risk of having a checking account is writing checks for more money than you have in your account, or overdrawing your account.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Overdraft ProtectionOverdraft Protection Banks charge a fee for a returned check.
The business you wrote the check to will probably also charge a fee.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Overdraft ProtectionOverdraft Protection Overdraft protection is a line of credit for overdrawn checks.
You pay a service fee for the overdraft protection and interest on the overdrawn amount until it is repaid.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Stop Payment Stop Payment A stop payment is an order for a bank not to cash a particular check.
Banks charge a fee to stop payment on a check.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Debit Cards Debit Cards A debit card is like a credit card but money is taken directly from your checking account when you use it rather than charging the amount to a credit account.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Online Checking Online Checking Online banking allows you to check your accounts, transfer money, or pay bills at any time of the day over the Internet.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Online Checking Online Checking Online checking is less expensive for banks, so service fees are often lower than a traditional account.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Online Checking Online Checking Banks offer the option of scheduling automatic payment of your bills from your checking account.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Fast Review
1. What happens if a customer has insufficient funds in a checking account to pay a check?
2. How is a debit card different from a credit card?
ChapterChapter 2929
Introduction to Business, Checking Accounts
Account Records Account Records An advantage of a checking account is that it enables you to keep records of your financial transactions.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Writing a Check Writing a Check The party to whom the check is written and who is cashing the check is the payee.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Writing a Check Writing a Check The party who wrote the check and is paying the money, or drawing it from an account, is called the drawer.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Writing a Check Writing a Check The bank or financial institution where the drawer has an account is the drawee.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Writing a Check Writing a Check Your check register is your checkbook log where you keep track of all your checking transactions.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Depositing a Check Depositing a Check To deposit a check in your account you need to fill out a deposit ticket.
Many ATM machines don’t require a deposit ticket.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Depositing a Check Depositing a Check To deposit or cash a check requires an endorsement, or the signature of the payee on the back of the check.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Depositing a Check Depositing a Check To endorse a check, follow these rules for your protection:
• Endorse the check on the back • Use a black pen so your signature
can’t be erased
continued
ChapterChapter 2929
Introduction to Business, Checking Accounts
Depositing a Check Depositing a Check
• Sign your name exactly as it’s written on the front of the check
• If you’re depositing a check rather than cashing it, write “For Deposit Only” above your signature.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Bank Statements Bank Statements A bank statement is the bank’s record of all the transactions in your checking account.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Figure29.2 SAMPLE BANK STATEMENT
Michael and Conchetta Chung received this bank statement.
What were the totals for checks written and for deposits for the month?
ChapterChapter 2929
Introduction to Business, Checking Accounts
Bank Statements Bank Statements A bank statement includes a record of all withdrawals, deposits, interest, and fees.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Bank Statements Bank Statements A bank statement also includes a record of all canceled checks, or checks you’ve written that have been cashed.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Fast Review
1. What are the three different parties on a check?
2. Why should you write “For Deposit Only” on the back of a check?
ChapterChapter 2929
Introduction to Business, Checking Accounts
Graphic OrganizerPaying by CheckPaying by Check
Graphic OrganizerGraphic Organizer
The bank charges you a fee and returns the check to the business. The business also charges you a fee.
Write the check
The bank withdraws funds from your account and pays the check.
Isthere
enough moneyin your account?NO YES
ChapterChapter 2929
Introduction to Business, Checking Accounts
Bank Reconciliation Bank Reconciliation Bank reconciliation is the process of seeing whether your records agree with the bank’s records for your account.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Balancing Your Checkbook Balancing Your Checkbook The first step to reconciling your account is to see whether the bank has processed all your checks and deposits.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Balancing Your Checkbook Balancing Your Checkbook Outstanding checks are checks that have been written but haven’t yet been cashed.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Balancing Your Checkbook Balancing Your Checkbook Deposits that haven’t been recorded on the bank statement should be added to the bank statement balance.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Balancing Your Checkbook Balancing Your Checkbook The service fee should be subtracted from the balance in your check register.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Balancing Your Checkbook Balancing Your Checkbook If your account earns interest, add the interest shown on the bank statement to your check register.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Balancing Your Checkbook Balancing Your Checkbook If the balances on your bank statement and in your check register are the same, you have reconciled (or brought into agreement) your check register balance with the bank statement balance.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Finding Errors Finding Errors If the balances on your bank statement and in your check register don’t agree, check your own account records to see whether you wrote the correct amount for each check and deposit.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Finding Errors Finding Errors
Check to see whether you carried the correct balance forward for each new page of your check register.
Check all your additions and subtractions.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Finding Errors Finding Errors Recheck to see that you have correctly identified all of the outstanding checks and deposits that haven’t been processed by the bank.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Finding Errors Finding Errors Check the bank’s additions and subtractions.
ChapterChapter 2929
Introduction to Business, Checking Accounts
Fast Review
1. What is the difference between a cancelled check and an outstanding check?
continued
ChapterChapter 2929
Introduction to Business, Checking Accounts
Fast Review
2. What charges do you need to add and subtract from your check register to reconcile it with your bank statement?
ChapterChapter 2929
Introduction to Business, Checking Accounts
When you write a check at the store, what do you think the store does with it?
continued
ChapterChapter 2929
Introduction to Business, Checking Accounts
What do you think an intermediary bank does?
What’s the purpose of the routing number on a check?
continued
ChapterChapter 2929
Introduction to Business, Checking Accounts
How do you know when a check has cleared?