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FABM module 8 Hand Out

FABM2

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7 views

FABM module 8 Hand Out

FABM2

Uploaded by

jennylyn.brase
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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GRADE 12

Learner
2nd SEMESTER

’s
BASIC DOCUMENTS AND TRANSACTIONS RELATED TO BANK DEPOSITS

Assets are resources owned by a company and in order to safeguard its assets and to ensure that

Answer
company resources are not misused or misappropriated, the company implements controls. Cash is an
important asset of a company and it is also one of the easily misappropriated assets if not properly
safeguarded. Bank accounts are at the center of critical control policies for cash. All cash receipts should be
Sheet
deposited in the bank at the end of the day. Very minimal amounts should be left in the company’s premises
overnight. Also, cash payments should be settled through bank check and processes through the voucher
system. Given the company’s extensive use of the banking system, we will discuss the different kinds of bank
accounts usually maintained by a business in this lesson.

Different Kinds of Bank Accounts


SAVINGS ACCOUNT
• The simplest bank account is the savings account. The business deposits money in the
bank for safekeeping.
• The account earns minimal interest and may have a minimum balance requirement
• Some savings accounts are linked with passbook.
o Passbook – is a booklet used to record bank transactions on a savings account. It
contains a chronological record of deposits, withdrawals and interest earnings.
• Some savings account come with an ATM card
o ATM Card – are used for making transactions in Automated Teller Machines (ATM).
Some ATM cards also functions as debit cards.
o Debit Cards – are linked with the VISA or Mastercard networks that allow depositors to
use their cards to make payments in various establishments.
• Some banks give their depositors internet banking privileges. This allows them to access their
statement of accounts and make payments online
• Withdrawals from savings account maybe made over-the-counter, ATMs, online
payments and debit card transactions.

CHECKING or CURRENT ACCOUNT


• A checking account is like a savings account with an added feature – the depositor can
issue bank checks
o Bank checks – is an acceptable form of payments. It allows depositors to pay large sums using one
sheet of paper instead of carrying currencies. It can also provide additional control feature that
prevent misappropriation of cash. A payee can be specifically named such that no other person or
entity can use it. Moreover, a check can be “crossed” or “restricted for payee’s account only”. This
means that the check will only be accepted for deposit to the payee’s bank account and cannot be
encashed over the counter.
• Checking accounts rarely earn interest because of the fast turnover of transactions. To
cater their customers’ demand for better interest rates, most banks offer hybrid accounts.
• These are combinations of savings and checking account. There are ATM-passbook checking
accounts. There are also hybrid accounts that earn higher interest rates but limits check withdrawal to
a few checks a month such as premium deposit account.

TIME DEPOSITS AND OTHER INVESTMENT ACCOUNTS


Time Deposit
• Time deposit accounts are investment placements.
• The depositor agrees not to withdraw the funds over the contracted period in exchange for fixed interest
rates that are higher than deposit rates.
• Time deposits are evidenced by certificates of time deposits (CTD)

Unit Investment Trust Fund (UITF)


• UITF allows investors to gain the benefit and suffer the losses of investments in stocks and bonds without
directly investing in those securities.
• Investors purchase units of the pooled funds
• The investor earns income not through interest but on the increase in fair market value of the pooled fund.

Remember!
• Savings and checking accounts are the two accounts usually maintained by business
• Depending on its banking license, the bank can offer other forms of investment vehicles to
their clients. There are mutual funds, variable insurance, government securities and corporate
notes, among others. We limit our discussion to time deposits and UITF.
Bank Deposits and Wirhdrawal sli

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