BANK ACCOUNTS

What is a Bank?
A bank is a financial institution licensed to accept cash deposits from the public and
make loans. They are involved in financial services such as lending activities to for personal
and business needs. It may also offer financial services such as wealth management, currency
exchange, and safe deposit boxes. Banks have their main offices where some could be found
in areas like Makati and Ortigas. Due to their diverse operations, banks provide branches to
have a faster and easier transactions. Individuals and businesses deposit their cash in banks
mainly for safekeeping. Some invest their money to the bank to earn additional money though
interest. Technically speaking, once a depositor deposits money in the bank, the depositor
lends money to the bank and thus, bank owes money to the depositor.
In most countries banks are regulated by the national government or central bank.
Kinds of Bank
1. Retail Bank
2. Commercial or Corporate Bank
3. Investment Bank

Type of Bank Accounts

This book will focus on financial services for business needs. Recall that in Unit 1, we
discussed about the 1st line item in the Balance Sheet, the “Cash” account. Remember that
Cash includes Cash on Hand and Cash in Bank. Those deposits in banks are called recorded in
the Cash in Bank account. Deposits in banks generally are classified in savings account,
checking account and other accounts such as time deposits. The one who deposits money in
bank is called depositor.

Savings Account (SA)

Savings account is the most common type of bank account. This account is used mainly
for safekeeping. This account is the easiest account to open in a bank. Individuals and business
could avail this type of bank account. Bank issues an Automated Teller Machine (ATM) Card as
evidenced of deposit. An ATM card (see figure 8.1) is a small ID-type card use by a depositor to
withdraw cash from the SA. A computer driven machine is provided by banks called ATM to
process the depositor’s transactions. Hence, using and ATM and an ATM card, a depositor
could withdraw or transfer money without going to bank premises. ATM card is provided by a
Username and a Password.ATM card could also use to pay purchases through a machine
linked with VISA or Mastercard networks. It is usually experienced when paying in a
Department or Grocery Store. Depositors could also request a passbook as evidenced of their
SA. A passbook is a small book-like document where transactions are recorded by the bank.
The bank requires the depositor a maintaining balance in an SA. The maintaining balance is a
minimum amount that the depositor should leave to its SA. It can be withdrawn but once
removed, the SA could be subjected to a penalty. Though Savings Account earns interest, it is
minimal in amount. SA could also be enrolled in online banking where a depositor could access,
view and process bank transactions through online connection.

Current Account (CA)

Current Account is also a common type of bank account. CA is also provided by an

ATM card. It has the same feature of a Savings Account. CA doesn’t have a maintaining
balance. If any, it is minimal in amount. This account is usually used in payroll account of
employees. Bank does not issue passbook for this kind of account and it doesn’t even earn an
interest

Checking Account

Checking account is another type of account where the depositor could withdraw
through issuance of check. A check (see figure 8.2) is a small piece of paper, usually in
rectangular shape. Bank allows the use of check as form of payment instead of using coins or
bills. Checking Account is suitable for business use for control purposes. Bank issues passbook
as evidenced for the account. Weeks after the end of a month, bank sends a Bank Statement. It
is a document where all transactions, in details, of the deposited are listed for a particular
month. This statement is also used in preparation of bank reconciliation which will be discussed
in the later part of this Unit. Due to technology, some depositors use online banking to generate
its Bank Statement. Hence, the statement is already in a softcopy document. However, some
depositors still use hardcopy for record keeping purposes. Checking account also has a
maintaining minimum balance and earns interest but just like Savings Account, it is minimal in
amount.

Certificate of Deposits
 A certificate of deposit ( CD) is a product offered by banks and credit unions that give
an interest rate premium in trade for the customer agreeing to leave a lump-sum
deposit untouched for a predetermined period of time.
Other Investment Account in Bank

Some depositors open account where the purpose is not for safekeeping, but to bigger
amount of interest. Depositor is now considered as investor. Demand deposits and Time
deposits are included in this kind of bank account. Bank issues Certificate of Deposits to
depositors as evidenced. Due to the nature of the account, depositors are prohibited to
withdraw money for a certain period of time.

Figure ATM
8.1 Card
POY BANK

000 0615 1988 000 VALID THRU 06/15/2018

JTT COMPANY

Figure 8.2 Check.

(Blank Check)

Acct name: JTT Check No.: B

Company 00100015 R
Acct No.:
06151988 Date:
PA __________________
Php:
Y ___________________
O
P
E
POY BANK
Valenzuel Branch
McArthur Highway, Marulas, Valenzuela
City
(Filled-up Check)

Acct name: JTT Check No.: B

Company 00100015 R
Acct No.:
06151988 D F
___________2
PA a
P e 3
___________
_______ 0
Y BINJI S. h 0
_______
O MISSION
P Thirty
E Thousand Only.
POY BANK
Valenzuela Branch
McArthur Highway, Marulas, Valenzuela
City

Figure 8.2 shows an example of a blank and filled-up check. A valid signatory must sign the
check for such to be accepted by the bank. Erasures are not allowed unless it is countersigned
by the signatory on top of the erasure.
Figure 8.3 Bank Statement

POY BANK Account No: 06151988

Valenzuela Account Name: JTT
Branch Company
Running
Date Code Description Reference Withdrawals Deposits
Balance
2/28/2018 BEGINNING BAL 100,000.00
CHECK
03/01/2018 17790 100001 5,500.00 94,500.00
WITHDRAWAL
03/03/2018 17881 CHECK DEPOSIT 55,000.00 149,500.00
CHECK
03/05/2018 17821 100022 6,221.18 143,278.82
WITHDRAWAL
03/07/2018 17824 CHECK DEPOSIT 6,700.00 149,978.82
CHECK
03/09/2018 17923 100005 10,120.56 139,858.26
WITHDRAWAL
CHECK
3/13/2018 17687 100027 7,564.00 132,294.26
WITHDRAWAL
3/15/2018 17723 CHECK DEPOSIT 125,000.00 257,294.26
3/21/2018 17591 CASH DEPOSIT 1,200.00 258,494.26
CHECK
3/24/2018 17981 100012 85,724.90 172,769.36
WITHDRAWAL
3/25/2018 17765 CHECK DEPOSIT 8,670.00 181,439.36
 3/27/2018 17650 CASH DEPOSIT 567.52 182,006.88
CHECK
3/28/2018 17923 100015 20,000.00 162,006.88
WITHDRAWAL
CHECK
3/31/2018 17431 100010 34,560.10 127,446.78
WITHDRAWAL
3/31/2018 317-061588i INTEREST INCOME 454.57 127,901.35
317- BANK SERVICE
3/31/2018 234.56 127,666.79
061588sc CHARGE
3/31/2018 ENDING BAL 127,666.79

Bank Statement comes from the bank in printed copy. Recall that this document could be
downloaded in an online banking at bank’s website. Below explain the contents of the Bank
Statement.
1. Date – represents the date when the transaction occurred.
2. Code – this is a reference that bank uses for to record the depositor’s transactions.
3. Description – column that describes the kind of transaction
4. Reference – means number for depositor use. For check withdrawal, it is the check
number.
5. Withdrawals – are amounts that are deductions from the depositor’s balance. This is
usually consists of:
5.1. Check payments made by the depositor. These checks are presented by the
check payees to the bank for encashment or for deposit to the payees’ bank
account.
5.2. Bank Debits – it includes Bank Service Charge, a service fee charged by the
bank from depositor’s account.
5.3. Bank error is a transaction error made by the bank that decreased the
depositor’s account.
6. Deposits – this column represents addition to depositor’s account. This is usually
consists of:
6.1. Cash and Check Deposits
6.2. Bank Credits – it includes Interest Income. As discussed before, savings and
checking accounts earn interest but minimal in amount.
6.3. Bank error is a transaction error made by the bank that increased the
depositor’s account.

Figure 8.4 Certificate of Deposit

 -POY BANK-

CERTIFICATE OF DEPOSIT

NAME OF DEPOSITOR: JTT COMPANY

DATE: 15 JUNE 2016

DESCRIPTION: TIME DEPOSIT

REFERENCE NUMBER: 2282017

AMOUNT: PHP 100,000.00

TRANSACTION CODE: COD-061588-16

Deposit Slip (see Figure 8.5 and 8.6)

A deposit slip is used by depositor as evidenced of deposit. This is filled-up by the
depositor and submitted to the bank’s teller for validation. Once validated, a copy is given by
the bank teller to the depositor. Again, the copy should be validated. A not validated deposit slip
cannot be presented as proof of deposit. The depositor’s account is automatically increased as
a result of deposit. Deposit may be in the form of check deposit or cash deposit. Anyone can
deposit from anyone’s account.

Withdrawal Slip (see Figure 8.5.1)

On the other hand, withdrawal slip is used to withdraw money from a passbook account.
Only the depositor or account holder can only withdraw from the bank account.

Figure 8.5 (Blank Cash Deposit Slip) (Filled-up Cash Deposit Slip)
-POY BANK- -POY BANK-

CASH DEPOSIT SLIP CASH DEPOSIT SLIP

ACCOUNT NAME: ACCOUNT NAME: JTT COMPANY

 ACCOUNT NO.: ACCOUNT NO.: 06151988

CURRENT OTHERS CURRENT OTHERS

SAVINGS ______________________ SAVINGS ______________________

PESO OTHERS PESO OTHERS

DOLLAR ______________________ DOLLAR ______________________

BREAK DOWN BREAK DOWN

Denomination No. of pieces Amount Denomination No. of pieces Amount

1,000 1,000 5 5,000

500 500

200 200 2 400

100 100 7 700

50 50 3 150

20 20

10 10 2 20

Others Others 7 2

Total amount of deposit Total amount of deposit 6,277 2

This serves as your receipt when validated. This serves as your receipt when validated.
Take note:
The adjusted balance must be equal.