Chapter One Flashcards
Where must a business place the cash it receives and why
Bank, so the bank can hold and safeguard money for them
A positive bank balance shown on a bank account is ?
A credit
What is an overdraft shown as on the bank?
A debit
What is ‘counter credit’ in the bank statement
Money put into the bank with a paying in slip
How many parties are included in a cheque
Drawee
Payee
Drawer
Cheque : what is a drawee
There bank that has issued the cheque and will have to pay it
Cheque: what is a drawer
The person who is writing and signing the cheque to make a payment
Cheque: what is a payee
The person who the cheque is being paid to
What is the clearing system with a cheque
A system set up resulting in a three day delay between paying a cheque and accessing the money
What are cheques displayed as when using a paying in slip
Counter credit
What is a dishonoured cheque ?
A cheque that has not been paid as expected by the bank on which it is drawn
Why might a cheque be dishonoured by the drawee
Insufficient funds in the drawers account
What happens with a dishonoured cheque
It is sent back to the payee so payment can be pursued another way
How does a credit card effect bank account
It doesn’t effect bank until it’s been paid off
What is a bank draft
A non cancellable cheque drawn on the back rather than the customers account
What is direct credit
A deposit of money by a payer directly into a payees bank account
When is direct credit used
When paying wages and suppliers
When do direct credit payments effect bank
The day the payment is made
What is chaps
Instruction by the business to its bank to move a large amount of money to the recipient’s account so the money is available the same working day
