Bank Accounts
Q: What type of bank account is most commonly used for paying bills?
A: Checking account.
Q: What is a check?
A: A written order directing a bank to pay money from an account.
Q: What form do you complete when putting money into the bank?
A: Deposit slip.
Q: What does it mean to reconcile a bank statement?
A: Compare the bank’s records with your checkbook register.
Q: What does ATM stand for?
A: Automated Teller Machine.
Q: What is the purpose of a savings account in business?
A: To store money and earn interest.
Q: What is an endorsement?
A: A signature on the back of a check to authorize its transfer.
Q: What must be listed on a deposit slip besides the date and account number?
A: Cash, checks, and total deposit.
Q: What is an outstanding check?
A: A check written but not yet cleared by the bank.
Q: What is the purpose of a debit card?
A: To make purchases directly from a checking account.
Q: What is the difference between a checking account and a savings account?
A: Checking = frequent transactions; Savings = limited access, earns interest.
Q: What is a restrictive endorsement?
A: Limits how a check can be used, e.g., “For deposit only.”
Q: What is the purpose of a withdrawal slip?
A: To take money out of a savings account.
Q: What is an outstanding deposit?
A: A deposit made but not yet recorded by the bank.
Q: What is online banking?
A: Managing bank accounts using the internet.
Q: Why do businesses often maintain more than one bank account?
A: To separate types of funds (e.g., payroll, operating expenses, savings).
Q: What should you write on a check to prevent fraud if there is space left on the amount line?
A: A line or slash after the written amount.
Q: Why should currency and coins be listed separately on a deposit slip?
A: For accuracy and to match the bank’s counting process.
Q: What two records are compared when reconciling a bank account?
A: The bank statement and the checkbook register.
Q: What is electronic funds transfer (EFT)?
A: Moving money electronically from one account to another.
Q: What is the purpose of a bank reconciliation statement, and how can it protect a business from fraud or accounting errors?
A: It matches the company’s records with the bank’s records to identify discrepancies, detect fraud, and correct accounting mistakes.
Q: What is a postdated check?
A: A check written with a future date that cannot be cashed until that date.
Q: What should you always do with your copy of a deposit receipt?
A: Keep it to compare with your records during reconciliation.
Q: Why is reconciliation important?
A: To detect errors, prevent fraud, and ensure accurate balances.
Q: What is an advantage of electronic banking for businesses?
A: Faster transactions, improved record keeping, and convenience.