Basic Documents and Transactions

Related to Bank Deposits

Business usually maintain two types of

account:
1.savings account , and
2.checking or current account.
 Business Accounts
A. Savings Accounts
• These are intended to provide an incentive for the
depositor to save money.
• The depositor can make deposits and withdrawals
using the form provided by the bank.
• Banks usually pay an interest rate that is higher than a
checking account or a current account.
• Some savings accounts have a passbook, in which
transactions are logged in a small booklet that the
depositor keep
• Some savings accounts charge a fee if the balance falls
below a specified minimum
 Business Accounts
B. Checking or Current Accounts
◦Money held under a checking account can be withdrawn
through issuance of a check
◦Banks usually allows numerous withdrawals and unlimited
deposit under this type of account.
◦The interest rate for checking account is usually lower as
compared to a savings account.
◦The account holder or depositor of a checking account is
normally provided at the end of the month a bank statement
showing all the deposits made, checks paid by the bank, and
the balance of the account. The depositor is given easy access
to the funds as compared to a savings account.
 Other Accounts
Time deposit account is a type of a savings account that is
held for a fixed-term and can be withdrawn only after the
lapse of the agreed period and by giving notice to the
bank. The account may be withdrawn also anytime
however the bank usually charges penalties. This type of
account yield high interest.
ATM (Automated Teller Machine) account wherein
withdrawals can be made through designated machines.
This is a 24 hour teller machine and the funds can be
withdrawn anytime. The advantage of this account is that
even if the banks are closed, you can withdraw your funds.
 Preparation of bank deposit and withdrawal slips
◦A withdrawal slip and deposit slip are written orders to the
bank. These slips are used to take out money or to put in
money to the depositors account.
◦There are instances that the depositor cannot attend
personally to withdraw the funds, he may authorize a
representative by indicating the name of the
representative in the space provided and the
representative must sign. There is a need for the
representative to bring a valid identification card upon
withdrawal otherwise the bank will not approval the
withdrawal.
 Preparation of bank deposit and withdrawal slips
Without a withdrawal slip, the bank will not allow you to get money from
your account. The required information in the withdrawal slip are:
◦ Account Name - the name of the depositor
◦ Account Number – the unique identifier given by the bank for every
account maintained
◦ Date of the withdrawal
◦ Type of account - savings or current
◦ Currency
◦ Amount to be withdrawn - the amount that the depositor wishes to
withdraw from his account. The amounts in words and in figures are
indicated.
◦ Signature of the Depositor – this is the most important part in the
withdrawal slip. The signature is a proof that the depositor is authorizing
the bank to get money from his account. Usually, the bank compares the
signature in the withdrawal slip against the signature in the bank records
submitted during the opening of the account
 Preparation of bank deposit and withdrawal slips
Deposit Slip - the bank provides deposit slip that
the depositor will fill up every time the depositor
will put in money to his account. The usually
required information in a deposit slip are:
◦ Account Name – this is the complete name of
the depositor that is reflected in the records of
the bank. If it has a pass book, the account
name is indicated on first page inside the
passbook.
◦ Account Number – this is a unique identifier of
the account maintained by the depositor.
 Preparation of bank deposit and withdrawal slips
◦ Amount in words and in figures – the amount
that the depositor wishes to put into his
account. The amount to be deposited maybe in
form of cash or check. If it is a cash deposit, the
breakdown of the cash is usually listed in the
deposit slip if it is a check deposit, the details of
the checks are indicated in the deposit slip, for
example: Issuing Bank, Address of the Issuing
Bank, date of the check and the amount.
 Identify and prepare check (cheque)
◦A check is a document that orders a bank to pay a specific
amount of money from a person's account to the person in
whose name the cheque has been issued.
◦The person writing the cheque, the drawer, has a
transaction banking account where his money is held. The
drawer writes the various details including the monetary
amount, date, and a payee on the cheque, and signs it,
ordering his bank, known as the drawee, to pay that person
or company the amount of money stated.
 Identify and prepare check (cheque)
◦The person writing the cheque, the drawer, has a
transaction banking account where his money is held. The
drawer writes the various details including the monetary
amount, date, and a payee on the cheque, and signs it,
ordering his bank, known as the drawee, to pay that person
or company the amount of money stated.
◦Checks are a type of bill of exchange and were developed
as a way to make payments without the need to carry large
amounts of money. The check number is usually indicated
in the upper right portion of the check.
 Identify and prepare check (cheque)
◦The following are the parties involved in a
transaction that uses check as medium of
exchange:
◦Drawer, the person or entity who makes the
check
◦Payee, the recipient of the money
◦Drawee, the bank or other financial institution
where the cheque can be presented for
payment.
 Identify and prepare check (cheque)
◦The following are the parties involved in a
transaction that uses check as medium of
exchange:
◦Drawer, the person or entity who makes the
check
◦Payee, the recipient of the money
◦Drawee, the bank or other financial institution
where the cheque can be presented for
payment.
Identify and understand the contents of a bank statement
◦At the end of every month, the bank furnishes a
statement to the depositor showing the movement of
the account.
◦It contain all the withdrawals, deposits and balance of
your account after every transaction.
◦It may also indicate bank charges that were deducted
by the bank automatically.
◦Also, interest earned by the account is likewise
reflected.
Identify and understand the contents of a bank statement
 Identify and understand the contents of a bank statement
◦The date column indicate the date the transaction was made.
◦The check number indicates the details of the check paid by the
bank.
◦The transaction code is normally a bank code for the
transactions.
◦The Debit column represents all charges or deduction made by
the bank to your account.
◦The Credit column represents the deposits or additions to your
account that was made by the bank.
◦The Balance column is the running balance after considering the
effect of the transaction to your account.
 Identify and understand the contents of a bank
statement
◦Samples of Debit transaction
◦Bank service charge - monthly fee charged by the bank for its servic
(Ex. cost of printing checks writing funds to other locations and othe
fees)
◦NSF - (Not Sufficient Fund) – Banks also use a debit memorandum
when a deposited check from a customer “bounces” because of
insufficient funds. Nowadays bank refer to this as DAIF (Drawn
Against Insufficient Fund) or DAUD (Drawn Against Uncleared
Deposits)
Identify and understand the contents of a bank
statement
◦Samples of Credit transactions
◦Collection of cash proceeds from
notes receivables.
◦Interest income earned by the
deposit.
 Identify and understand the contents of a bank statement

◦ As part of control, the bank statement received from the bank

is compared with the accounting records of the business. This
process is called bank reconciliation.
◦ Together with the bank statements, the banks will include the
copies of checks cleared or paid by the bank for that
particular month.