Fundamentals of Accountancy,

Business and Management 2

FINAL

MODULE 2
Ms. CHRYSANTHEMUM B. DURO

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 Module

2
Basic Documents and
Transactions Related to Bank
Deposits

I. Curriculum Standards:
Content Standards The learners demonstrate an understanding of the types of bank
accounts, basic transactions, and documents related to bank
deposits and withdrawals.
Performance The learners shall be able to share samples of bank account forms
Standards and documents in class and discuss their uses and importance.

Learning The learner:

Competencies 1. identify the types of bank accounts normally maintained by a
business; ABM_FABM12-IIc-5
2. differentiate a savings account from a current or checking
account; ABM_FABM12-IIc-6
3. prepare bank deposit and withdrawal slips; ABM_FABM12-
IIc-7
4. identify and prepare checks; ABM_FABM12-IIc-8
5. identify and understand the contents of a bank statement:
ABM_FABM12-IIc-9

Damean’s Beat and Christian Leaders, Competent Professionals, Critical Thinking Skills and
Career and Learning Self-Reliance
Related Values
Time Frame 4 days

II. Learning Objectives:

At the end of the lesson, you should be able to:

1. illustrate journal and general ledger;

2. differentiate the journal from the general ledger;
3. prepare journal entries to record basic business transaction;
4. determine balances of accounts using t-accounts.

III. Resources:
a. Materials:
Module, Answer Sheet, Laptop, Powerpoint,
b. References:
Beticon, Domingo, & Yabut, Fundamentals of Accountancy, Business and
Management 2, 2016)

(Robles & Empleo,Intermediate Accounting based on PFRS/ IFRS, 2010)

(Commission on Higher Education, Teaching Guide For Senior High School

Fundamentals Of Accountancy, Business, And Management 2, 2016)

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 IV. Lesson Proper:

INTRODUCTION
Bank deposits consist of money placed into banking institutions for safekeeping. These
deposits are made to deposit accounts such as savings accounts, checking accounts and money
market accounts. The account holder has the right to withdraw deposited funds, as set forth in
the terms and conditions governing the account agreement.
The deposit itself is a liability owed by the bank to the depositor. Bank deposits refer to
this liability rather than to the actual funds that have been deposited. When someone opens a
bank account and makes a cash deposit, he surrenders the legal title to the cash, and it becomes
an asset of the bank. In turn, the account is a liability to the bank.
There are several different types of deposit accounts including current accounts, savings
accounts, call deposit accounts, money market accounts and certificates of deposit (CDs).
Businesses usually maintain two types of accounts: (1) savings account, and (2)
checking or current account.

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 keep.
▪ 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 allow numerous withdrawals and unlimited deposits under this
type of account.
▪ The interest rate for checking accounts 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 yields high interest.
Another type of savings account that is popularly used nowadays is an 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.

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 In order to open an account, the bank will require individual’s certain documents such as
valid identification cards 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's account number

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.
o They 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
▪ 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.
Deposit Slip
The bank provides a deposit slip that the depositor will fill up every time the depositor
puts 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 the
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
• Amount in words and in figures – the amount that the depositor wishes to put into his
account. The amount to be deposited may be in the form of cash or check. If it is a cash
deposit, the breakdown of the cash is usually

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 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.

Check

• 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 payment

The date column indicates the date the transaction was made. The check number
indicates the details of the check paid by the bank. The transaction code is normally a bank code
for the transactions. The Debit column represents all charges or deductions made by the bank
to your account. The Credit column represents the deposits or additions to your account
that was made by the bank. The Balance column is the running balance after considering the
effect of the transaction to your account.

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 month.

Issuance check
▪ Cross Check

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

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 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.
▪ 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 exceeds 6 months from the
date of the check.
In case there are any erasures in the check, the check will not be accepted by the bank.
Kinds of checks
1. Customer’s check- checks received from customers. These are usually issued as
payment for the inventories and services that they have received from the entity.
2. Traveler’s check- checks with a security feature. Upon receipt of the traveler’s check,
the payee should immediately sign the traveler’s check. Before the payee can make use
of such check, the payee must sign the same check again.
This will prevent unauthorized use of the traveler’s check. This will become helpful
in cases where the check is lost after the first signature was made. The holder of the
lost or stolen traveler’s check will not be able to use it because he or she cannot easily
copy the signature of the original payee.

3. Manager’s Check- check issued by the bank managers. This a guarantee by the bank
that the holder of the check has the necessary funds deposited in their financial
institution.
4. Cashier’s Check- check issued by the bank cashiers. Like a manager’s check, a
cashier’s check guarantees that a certain amount has been deposited to the bank.
5. Company’s Undelivered Checks- checks prepared a company that will be delivered to
corporate creditors or suppliers. If the checks are not yet delivered to creditors or
suppliers, the amount indicated in the checks are still considered as part cash balance of
the issuing company.
6. Company’s Postdated Check- a company check already delivered to the payee, but it
cannot be encashed or deposited yet because the date indicated in the check has not
yet arrived. If the check dated January 22, 2016 was issued December 31, 2015, the
said check is postdated.
Since the payee or creditor still cannot deposit or encash the check, the check’s
value remains part of the cash balance of the issuing company.

7. Company’s Stale Checks- check issued by the company to suppliers and creditors and
not encashed on time. Payees like suppliers and creditors are often given six months
from the date of the check to encash it.

If the checks are not yet encashed after the month period, then the checks will be
considered stale checks and no longer be accepted by the bank.
However, the liability of the company to the creditors will remain. The creditor will just
request for another check from the company as a replacement.
As long as the replacement check has not yet been issued, the amount indicated in the
company’s stale check will be considered as part of the company’s cash balance. This is
since the company still maintains control over the amount.

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Activity 1: Try This!

Essay. Answer each question in not less than 5 sentences. 10 points.

This is the criteria:

Content: 7 pts
Organization of ideas: 3 pts_
10 pts

1. What is a bank statement and discuss the importance of a bank statement to a

depositor?
2. What is a check and who are the parties involved in the issuance of a check? Discuss
the role of each party.

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