Chapter 4: Banking

• 1-The checking account

• 2-Bank statement and Reconciliation process; Trends in

online Banking

The Checking Account

• Defining and stating the purpose of signature cards, checks (check stubs,

check registers) and writing them, endorsements, deposit slips and preparing

them.

Bank statement and reconciliation process;

Trends in online Banking

• Defining and stating the purpose of the bank statement.

• Completing a check register and a bank reconciliation.

• Explaining the trends in online banking.

The checking account

A check or draft is a written order instructing a bank, credit union, or savings and loan institution to pay a designated

amount of your money on deposit to a person or an organization.

Info needed to Open a business Checking account

• Company’s name and address.

• References.

• Type of account.

• The signature of the person authorized to sign checks.

• NOTE: Some companies may require more than one signature on a check.

Deposit Slips

The checks and/or cash you are depositing in your company’s

business account.

Preprinted checking account deposit slips

The Structure of a check

Types of common endorsements

• Blank Endorsement (Not a safe type of endorsement)

• Full Endorsement (Safer type of endorsement)

• Restrictive Endorsement (Safest type of endorsement)

Instructions to use a checking account

• Keep a record of the check.

• Know the amount of your written checks and the amount in the bank.

• Check stubs (To keep track of the written checks)

Signed check for Ronald Small

Date Check no . Amount Payable to for

June 5,2009 113 $83.76 Angel corporation Rent

Check stub-It should be completed before the check is written

The form of a Check

Bank statement and reconciliation process

• A Bank reconciliation is a process that explains the difference between

the bank balance shown in an organisation's bank statement, as supplied by

the bank, and the corresponding amount shown in the organization's own

accounting records at a particular point in time.

• 1. Beginning bank balance.

• 2. Total of all the account increases. Each time the bank increases the

account amount, it credits the account.

• 3. Total of all account decreases. Each time the bank decreases the account

amount, it deb- its the account.

• 4. Final ending balance

Bank statement and reconciliation process

Trends in online banking

In the introduction to this learning unit, you learned that financial

institutions are of fering cash incentives to induce customers to use

web-based services. We also said that many customers are still

concerned about security issues when banking online.

Changes of the trends in online banking

• Increased Use of Internet.

• New Bank Legislation.

• Role of Middlemen on the Internet.

Increased Use of

Internet

- The most popular reason to use Internet banking is the ability

to quickly pay your bills.

- The Internet method of bill paying has several advantages.

New Bank

LegislationA new piece of legislation known as Check 21 was

signed into law.- This legislation means that canceled checks can now be transferred electronically to customers rather than bundling them up and sending them through the mail.

E-Bay is a popular website and many people use it for buying and selling items at auction or outright and there are many options to pay by

Role of Middlemen on the Internet:.

Check Credit card

PayPal

1. PayPal can act between eBay and the seller.

2. Many people use PayPal because they believe it is safer than Check

or credit card.

Rosa Garcia received her February 3, 2009, bank statement showing

a balance of $212.80. Rosa’s checkbook has a balance of $929.15.

The bank statement showed that Rosa had an ATM fee of $12.00

and a deposited check returned fee of $20.00. Rosa earned interest

of $1.05. She had three outstanding checks: No. 300, $18.20; No.

302, $38.40; and No. 303, $68.12. Deposit for $810.12 was not on

her bank statement. Prepare Rosa Garcia’s bank reconciliation.

ROSA GARCIA

Bank Reconciliation as of February 3, 2009

Checkbook balance

Bank balance

Rosa’s checkbook balance $929.15

Add:

Interest 1.05

= $930.20

Deduct:

Deposited check returned fee $20.00

ATM +

12.00

=

32.00

Reconciled balance $898.20

Bank balance $ 212.80

Add:

Deposit in transit 810.12

=$1,022.92

Deduct:

Outstanding checks:

No. 300 $18.20

No. 302 38.40

No. 303 68.12 124.72

Reconciled balance $ 898.20

CHAPTER ORGANIZER AND STUDY GUIDE WITH

CHECK FIGURES FOR EXTRA PRACTICE QUIZZES

.Types of endorsements

• Bank reconciliation

• KEY TERMS

• CHECK FIGURES FOR EXTRA PRACTICE QUIZZES WITH PAGE REFERENCES