17.3 - Checks and Payment Methods Flashcards
when two or more people have an account together
joint account
a copy of the check that is automatically created when you write the check
duplicate copy aka carbon copy
What are the 3 main types of endorsements?
- blank endorsement
- full endorsement aka special endorsement
- restrictive endorsement
the bank’s account ID code for electronic sorting and routing
routing/aba #
(9 digit code written at the bottom of all checks)
a form issued by various organizations including traveler’s check companies, travel agencies, and many supermarkets, pharmacies, and convenience stores
express money order
- a service by which a bank deducts a payment from your account and transfers the funds to the appropriate companies
- this service requires a bank customer to authorize preset amounts of monthly expenses
automatic bill payment
if you make a mistake when writing a check, it is recommended that you ____
- erase it and correct it
- write ‘stop payment’ across the check
- rip it up immediately
- none of these choices
none of these choices
(should write ‘void’ on the check)
What are the 6 elements of a check?
- drawer
- payee
- drawee
- routing/ABA#
- account number
- memo
What is the purpose of a check register?
- to keep track of all transactions of a checking account
- includes checks written, debit card payments, cash withdrawals, and deposits
- this lets you know exactly how much you have in your checking account at all times
you owe your bank money that you have spent when there was no money in your account
overdrawn account
(you have negative amount in your account)
a digital reproduction of an original paper check known as a ____ check
- substitute
- cashier’s
- certified
- canceled
substitute
a report on the status of a bank account, usually sent monthly
bank statement
Who uses money orders?
normally a person who does not have a checking account and wants to send a payment through the mail
Why should you shop around for where to open an checking account?
- some banks charge a lot and high bank fees while other banks do not
- some banks give you interest earned on the money you have in your account while other banks do not
What are 8 tips that you should follow to avoid trouble when writing checks?
do not need to know word for word
- write checks only on the forms provided by your bank
- write checks in ink - helps prevent someone from erasing and entering different amount
- only write checks if money is available - writing a check for more money than what is in your account can result in an overdrawn account and will be charged a fee from bank
- use the current date
- avoid making checks payable to ‘cash’ or to ‘bearer’ - these checks can be cashed by anyone, instead write check to your own name
- always fill in the amount - if you leave it blank, you will be held responsible for whatever amount is written on check even if it is not correct
- void checks on which you make errors - do not try to erase or retrace your writing, just write ‘void’ across the check
- record EVERY payment from your checing account, whether the payment is by check, debit card or automatic payment
Balances shown in your account register and the bank statement may be different. What are the most common reasons for the difference?
- some of the checks you wrote may not have cleared (have not been paid by the bank yet)
- you may have forgotten to record a transaction in your register like a ATM deposit, automatic bill payment, or debit card purchase
- a service charge may appear on the bank statement
- you may have mailed a deposit to the bank that has not been received yet
- interest earned may have been added
- you may have recorded the amount of a check incorrectly in the check register, you may have added or subtracted incorrectly
the bank or other financial institution that pays the check
drawee
If you make deposits and withdrawals at an ATM close to your work but forget to record the transactions in your bank register and overdraw your account, what could you do better?
- you could keep your register with you at all times and record the transaction in it before using the ATM
- you could save your receipts and record the transaction in your register when you get home
- you could use online banking and check it regularly for items you forgot to record
a bank issued card used for ATM transactions
debit card
a fee a bank charges for handling a checking account
service charge
the owner of the account who signs the check
drawer
a device used for cash machine transactions
debit card
What do you do after you have reconciled your bank statement?
you correct any errors that you made on your register, the new balance should now agree with the bank statement
a ____ endorsement makes a check payable to anyone who has the check
a blank endorsement makes a check payable to anyone who has the check
(so…. if you sign the back of a check and do not write anything else on it and then lose it, anyone who finds it can then cash it or deposit it in their account)
what does ‘cleared’ mean?
that it’s been paid
a report sent by the bank to a depositor showing the status of his or her account
bank statement
a lost check made out to ‘cash’ can be cashed by anyone
- true
- false
true
a separate form on which the depositor keeps a record of deposits and checks
check register
- what you fill out when you are depositing money
- form lists all items you are depositing - currency (cash), coins or checks
- form shows your name, account number, the date, items deposited and total amount of the deposit
deposit slip
if you endorse a check with only your name, you have created a ____ endorsement
- blank
- restrictive
- full
- special
blank
number to identify the account you own at your bank
account number
(written at the bottom of all checks)
Kim’s bank statement shows a balance of $436.15 in her checking account. Her check register lists checks for $25.11 and $11.33 that have not cleared. There are no other outstanding deposits or payments. What balance does her check register show?
- $36.44
- $472.59
- $399.71
- $436.15
$399.71
(436.15-25.11-11.33 = $399.71)
a written notice that tells the bank not to pay a certain check
stop payment order
(banks charge a high fee for stopping payment on a check so only use this process for good reason - ex. a check was stolen or lost)
a personal check with guaranteed payment is a
- cashier’s check
- money order
- certified check
- traveler’s check
certified check
What information do most bank statements contain?
see example…
- the balance at the beginning of the month
- the deposits made during the month
- the checks paid by the bank during the month
- any automated teller transactions (ATM) made during the month
- any electronic fund transfers (EFT) or special payments the bank made
- service charges for the month, including charges for services like stopping payment on a check or fee for overdrawn account
- any interest earned on the account
- the balance at the end of the month
What are the 7 steps to properly fill out a check?
don’t need to know word for word
see sample check in answer
- write checks in order by number so you know which checks have been paid
- write the date in the proper space
- write the payee’s name on the line following ‘pay to the order of’.
- write the amount of the check in only numbers after the pritned dollar sign, write the amount close to the dollar sign to prevent someone from changing the amount, write the cents part close to the dollar numbers so additional numbers cannot be inserted (you wrote 101.35 but someone changed it to 1010.35 because you left room)
- write the dollar amount in words on the line below the payee’s name, begin writing at the far left end of the line, draw a line from the written numbers to the cents to fill all unused space and prevent someone from adding more words (One hundred one dollars and —————–35/100)
- write the purpose of the payment on the line at the bottom of the check
- sign checks with the same signature you wrote on the signature card
