Section 24.

1 Checking Accounts

Section 24.1 Checking Accounts Writing Checks Chapter 24

Section 24.1 Checking Accounts Section 24.2 Other Payment Methods

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

What Youll Learn

How to describe the process of opening a checking account and some of the depositors rights (p. 522)

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

What Youll Learn

How to explain the proper way to write a check and discuss problems associated with checking accounts (p. 524)

How to summarize the procedure for balancing a checkbook (p. 523)

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts Why Its Important Knowing about checking accounts and writing checks will help you use your money wisely.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Legal Terms
stale check (p. 522) outstanding checks (p. 523) bad check (p. 526) forgery (p. 527) uttering (p. 528)

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Section Outline
Using a Checking Account
Opening a Checking Account Balancing Your Checkbook Writing Checks

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Pre-Learning Question
How would you use a checking account?

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Using a Checking Account

Checks are: the most common kind of negotiable instrument in use a safe way to send funds through the mail convenient receipts for the people who write them
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

Opening a Checking Account

To open a checking account, you deposit money in a bank sign a signature card

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

Opening a Checking Account

Then the bank agrees to pay money out, up to the amount you have deposited, when you write a check.

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

Opening a Checking Account

A bank may refuse to pay a check that is more than six months old without incurring liability. Such a check is known as a stale check.
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

Balancing Your Checkbook

You should balance, or reconcile, your bank statement as soon as possible after receiving it. Carefully compare the check register balance with the bank statement balance to make sure that they agree.
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

Balancing Your Checkbook

Dont forget to take into consideration outstanding checks, or checks you have written that have not yet been returned to the bank for payment.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Writing a Check
Banks provide regular and special printed check forms. These checks display a series of numbers printed in magnetic ink that make it possible for computers to process the checks quickly and accurately.
Understanding Business and Personal Law Writing Checks

24.1 24.1 Checking Accounts Section

A Personal Check

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Parities to a Check
A check is a draft drawn on a bank and payable on demand. Drawerperson who writes the check Draweebank ordered to pay the money Payeeperson to whom the check is made payable
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

Avoiding Negligence
To avoid negligence, you should write checks that cannot be changed easily or signed by a forger.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Steps for Writing a Check

print the figures very close to the dollar sign keep all of the figures close together always start at the extreme left when writing amounts of money in words
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

Steps for Writing a Check

draw a line through any extra space that remains after youve written the amount this prevents someone from putting in words and figures to alter the value of the check
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

Steps for Writing a Check

be sure figures are the same as written amounts (if there is a difference, the bank will honor the written amount) write the name of the payee close to the words Pay to the order of
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

Steps for Writing a Check

fill in all unused space with a line make a note of the reason for the check

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Steps for Writing a Check

sign your name so that it looks as much as possible like the one on the bank signature card never sign a blank check

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Steps for Writing a Check

never cross out or change a check once it has been written if you make a mistake, print VOID across the incorrect check and write a new check

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

Bad Checks
A bad check is a check drawn on an account in which you have insufficient funds.

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

Bad Checks
Writing a check on an account with insufficient funds is larceny or attempted larceny, unless it is accidental.

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

Forged Checks
A forged check is a check that is signed by someone other than the drawer without the drawers authority. Forgery is a crime, subject to a fine and imprisonment.
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

Forged Checks
You are guilty of a crime if you knowingly offer a forged check, even if you did not personally commit the act of forgery.

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

Forged Checks
When an offeror deliberately submits a forged instrument to another, the resulting crime is called uttering.

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

Stopping Payment of a Check

You may order your bank to stop payment on a check that has not yet been paid by the bank.

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

Stopping Payment of a Check

However, if the check is given in payment of an amount actually owed, you still owe the amount of the debt.

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

Fill in the blanks in the statements below. 1. A _____ check is one that is signed by someone other than the drawer without the drawers authority.
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

ANSWER
Forged

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

2. A _____ check is one that is more than six months old.

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

ANSWER
Stale

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

3. A _____ check is one that is drawn on an account in which there is insufficient funds.

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

ANSWER
Bad

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

ANSWER
4. A _____ check is one that has been written but not yet returned to the bank for payment.

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Section 24.1 Checking Accounts

ANSWER
outstanding

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

Section 24.1 Assessment

Reviewing What You Learned 1. How is a checking account opened?

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

Section 24.1 Assessment

Reviewing What You Learned Answer

By depositing money in the bank and signing a signature card.

Understanding Business and Personal Law

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Section 24.1 Checking Accounts

Section 24.1 Assessment

Reviewing What You Learned 2. Describe the proper way to write a check.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Reviewing What You Learned Answer

When handwriting a check, place the figures very close to the dollar sign and keep all figures close together. Always start at the extreme left when writing amounts of money in words.
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Reviewing What You Learned Answer

Draw a line in any part of the space not needed for the amount. This prevents someone from putting in words and figures to alter the value of the check.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Reviewing What You Learned Answer

Write the name of the payee close to the words Pay to the order of and fill in all unused space with a line. Make a note of the reason for the check.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Reviewing What You Learned Answer

Sign your name so that it looks as much as possible like the one on the bank signature card.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Reviewing What You Learned Answer

Never sign a blank a check. Never cross out or change a check once it has been written.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Reviewing What You Learned 3. Summarize the process of balancing your checkbook.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Reviewing What You Learned Answer

Compare the check register balance with the bank statement balance to be sure they agree. When balancing the account, it is necessary to take into consideration outstanding checks.
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Critical Thinking Activity Banking Fees

Why do you think banks charge a fee to process an order to stop payment?

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Critical Thinking Activity Answer Banking Fees

Answers may vary but should recognize that the bank is charging for the time that its employees spend processing the order.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Legal Skills in Action

Calculating Costs You deposit a $100 check from your friend Ted into your checking account and then write a $46.18 check to pay for groceries.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Legal Skills in Action

Calculating Costs Four days later, you receive a notice from the bank that Teds check was bad and your account was debited $25 for the unpaid deposit.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Legal Skills in Action

Calculating Costs Because the funds from your deposit did not become available, your check was returned to the grocer unpaid. Your account is debited another $25 for the unpaid check.
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Legal Skills in Action

Calculating Costs The next day you receive notice from your grocer that you must pay a fee of $25 for the returned check and replace it with a bank check or money order. You pay 75 cents for the money order.
Understanding Business and Personal Law Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Legal Skills in Action

Calculating Costs Calculate how much you really spent to purchase $46.18 worth of groceries.

Understanding Business and Personal Law

Writing Checks

Section 24.1 Checking Accounts

Section 24.1 Assessment

Legal Skills in Action Answer

Calculating Costs $121.93. Original check amount, $46.18. Bank fees, $50. Grocers returned check fee, $25. Cost of money order, .75.
Understanding Business and Personal Law Writing Checks

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