Basic Documents and Transactions related to Bank Deposits

Specific Learning Outcomes At the end of the topic, learners should be able to:
1. Differentiate a savings account from a current or checking account
2. Prepare bank deposit and withdrawal slips
3. Prepare checks
4. Understand the contents of a bank statement

A. Savings Accounts
• These are intended to provide an incentive for the depositor to save money.
• The depositor can make deposits and withdrawals using the form provided by the bank.
• Banks usually pay an interest rate that is higher than a checking account or a current account.
• Some savings accounts have a passbook, in which transactions are logged in a small booklet that the depositor
keeps.
• Some savings accounts charge a fee if the balance falls below a specified minimum

B. Checking or Current Accounts

• Money held under a checking account can be withdrawn through issuance of a check
• Banks usually allows numerous withdrawals and unlimited deposit under this type of account.
• The interest rate for checking account is usually lower as compared to a savings account.
• The account holder or depositor of a checking account is normally provided at the end of the month a bank
statement showing all the deposits made, checks paid by the bank, and the balance of the account.
• The depositor is given easy access to the funds as compared to a savings account.

Time deposit account (or a certificate of deposit account) which is a type of a savings account that is held for a fixed-
term and can be withdrawn only after the lapse of the agreed period and by giving notice to the bank. The account
may be withdrawn also anytime however the bank usually charges penalties. This type of account yield high interest.

ATM (Automated Teller Machine) account wherein withdrawals can be made through designated machines. This is
a 24 hour teller machine and the funds can be withdrawn anytime. The advantage of this account is that even if the
banks are closed, you can withdraw your funds. In order to open a particular account, the bank will require
individuals certain documents such as valid identification card and will ask you to fill-up the forms prepared by the
bank. Upon approval of the application to open an account, the bank will give the depositor his account number

Debit Card / Credit Card

Debit cards allow bank customers to spend money by drawing on funds that they deposited with the card provider.
Credit cards allow consumers to borrow money from the card issuer up to a certain limit in order to purchase items
or withdraw cash.

A debit card is not a credit card. When you use a debit card, the money is deducted from your checking account.
With a credit card, you're borrowing money to be repaid later. ATM and debit cards allow you to use ATMs, a safe
and convenient way to manage your money.

2. Preparation of bank deposit and withdrawal slips

A withdrawal slip and deposit slip are written orders to the bank. These slips are used to take out money or to put in
money to the depositors account.

Withdrawal Slip
Without a withdrawal slip, the bank will not allow you to get money from your account. The required information in
the withdrawal slip are:
• Account Name - the name of the depositor
• Account Number – the unique identifier given by the bank for every account maintained
• Date of the withdrawal
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• Type of account - savings or current
• Currency
• Amount to be withdrawn - the amount that the depositor wishes to withdraw from his account. The amounts in
words and in figures are indicated.
• Signature of the Depositor – this is the most important part in the withdrawal slip. The signature is a proof that the
depositor is authorizing the bank to get money from his account. Usually, the bank compares the signature in the
withdrawal slip against the signature in the bank records submitted during the opening of the account.
There are instances that the depositor cannot attend personally to withdraw the funds, he may authorize a
representative by indicating the name of the representative in the space provided and the representative must sign.
There is a need for the representative to bring a valid identification card upon withdrawal otherwise the bank will
not approval the withdrawal
See actual sample.

Deposit Slip
The bank provides deposit slip that the depositor will fill up every time the depositor will put in money to his
account. The usually required information in a deposit slip are:
• Account Name – this is the complete name of the depositor that is reflected in the records of the bank. If it has a
pass book, the account name is indicated on first page inside the passbook.
• Account Number – this is a unique identifier of the account maintained by the depositor.
• Date of Deposit
• Type of Account
• Currency

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• Amount in words and in figures – the amount that the depositor wishes to put into his account.
The amount to be deposited maybe in form of cash or check. If it is a cash deposit, the breakdown of the cash is
usually listed in the deposit slip if it is a check deposit, the details of the checks are indicated in the deposit slip, for
example: Issuing Bank, Address of the Issuing Bank, date of the check and the amount.

3. Identify and prepare check (cheque)

A check is a document that orders a bank to pay a specific amount of money from a person's account to the person
in whose name the cheque has been issued. The person writing the cheque, the drawer, has a transaction banking
account where his money is held. The drawer writes the various details including the monetary amount, date, and a
payee on the cheque, and signs it, ordering his bank, known as the drawee, to pay that person or company the
amount of money stated. Checks are a type of bill of exchange and were developed as a way to make payments
without the need to carry large amounts of money. The check number is usually indicated in the upper right portion
of the check.

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The following are the parties involved in a transaction that uses check as medium of exchange:
• Drawer, the person or entity who makes the check
• Payee, the recipient of the money
• Drawee, the bank or other financial institution where the cheque can be presented for payment.

4. Identify and understand the contents of a bank statement

At the end of every month, the bank furnishes a statement to the depositor showing the movement of the account.
It contain all the withdrawals, deposits and balance of your account after every transaction. It may also indicate
bank charges that were deducted by the bank automatically. Also, interest earned by the account is likewise
reflected.

The following are the parties involved in a transaction that uses check as medium of exchange:

• Drawer, the person or entity who makes the check

• Payee, the recipient of the money

• Drawee, the bank or other financial institution where the cheque can be presented for payment.

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4. Identify and understand the contents of a bank statement

At the end of every month, the bank furnishes a statement to the depositor showing the movement of the account.
It contain all the withdrawals, deposits and balance of your account after every transaction. It may also indicate
bank charges that were deducted by the bank automatically. Also, interest earned by the account is likewise
reflected.

1. Cross Check (for payee’s account only) It is marked to specify an instruction about the way it is to be redeemed. A
common instruction is to specify that it must be deposited directly into an account of the payee. It is usually done by
writing two parallel lines on the upper left portion of the check. A cross check cannot be encashed over the counter
by the payee. It should be deposited to the payees account.

2. Stale Check A cheque which a bank will not accept and exchange for money or payment because it was written
more than a certain number of months ago. In the Philippines a check becomes stale if it exceed 6 months from
the date of the check.

Samples of Debit transaction

 Bank service charge - monthly fee charged by the bank for its services (Ex. cost of printing checks writing
funds to other locations and other fees)
 NSF - (Not Sufficient Fund) – Banks also use a debit memorandum when a deposited check from a customer
“bounces” because of insufficient funds. Nowadays bank refer to this as DAIF (Drawn Against Insufficient
Fund) or DAUD (Drawn Against Uncleared Deposits)

Samples of Credit transactions

 Collection of cash proceeds from notes receivables.

 Interest income earned by the deposit.

As part of control, the bank statement received from the bank is compared with the accounting records of the
business. This process is called bank reconciliation. Bank reconciliation will be discussed in the succeeding chapters.

Together with the bank statements, the banks will include the copies of checks cleared or paid by the bank for that
particular month.

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