Commercial Banking Flashcards
Services from a bank that a company will use
- night safes
- paypath
- Internet banking
- loan facilities
Franchising
-a franchise is when the owners of a big business give permission to another person to set up a branch of the business in that location
When a business applies for a loan they are required to give what?
- Business Plan
- Cash Flow Forecast
- Audited Accounts
- Security/Collateral
Collateral
-something of value used as security against a loan that a bank can sell if the loan is not repaid
When opening a bank account you must include
- certificate of incorporation
- memorandum of association
- signatures of people allowed to sign cheques
- articles of association
- resolution signed by directors to open the account
Bank reconciliation
Comparing the ACB to the Bank statement
Updating the Cashbook
Preparing a bank reconciliation account
Why bank reconciliate?
- to find out which cheques have not been dashed
- to see what my actual bank balance is.
Why might an ACB and a bank statement
- bank charges
- outstanding O/S cheque
- credit transaction that’s you’re unaware of
Bank statement
Letter from the bank stating actual amount in the bank
Overheads (def.)
Item used to describe the expenses of a business
monitoring overheads
- used to control expenses
- to cross check expenses expected (budget) versus actual expenditure (ACB)
Procedures for monitoring overheads
- Prepare budget
- Record actual overheads in an ACB
- Compare budget to actual overhead
- Identify why there are differences
