M9 BANK TRANSACTIONS
penalties.
TYPES OF BANK ACCOUNTS
A bank account represents funds entrusted by a
depositor to a bank for safekeeping. The three basic
types of accounts are:
1. Savings account
- A bank account that earns modest
interest rate and is intended to
encourage savings
- Normally evidenced by a “passbook”
Passbook
- shows the depositor’s deposits and
withdrawals, the amount of interest
earned by the deposit, and the balance
of the account
- the depositor may also opt to receive an
automatic teller machine (ATM) card
either in lieu of a passbook or together
with a passbook.
ATM Card
- a plastic card used to withdraw money
from an ATM
- can be used as a debit card, meaning
you can use it to pay electronically
o e.g., you can use a debit card to
pay for groceries by swiping the
card just like a credit card.
o the difference is that, in a debit
card you are using your own
funds; in a credit card, you are
borrowing the credit bank’s
funds
Interest on a savings account is accrued
daily, based on the end-of day balance, but is
reflected on the account at the end of every
quarter. The interest earned is reduced by a 20%
withholding tax.
Opening a bank account requires a face-
to-face contact between the bank’s authorized
representative and the depositor. The minimum
requirements are two (2) valid IDs and the initial
amount of deposit. However, depending on the
bank’s policy, additional requirements may be
required such as 2 copies of 2x2 photos or 1x1
photos, billing statement (to verify your billing
address), and Tax Identification Number (TIN)
Opening a bank account requires an
initial amount of deposit and a required
maintaining balance. If the balance of the
deposit falls below the required maintaining
balance, the bank charges the depositor some
Furthermore, if the bank account
becomes dormant, the bank charges another
penalty called “dormancy fee.” A dormant or
inactive account is one where no deposits or
withdrawals were made within a period of 2
years for savings account or 1 year for checking
account.
2. Current or checking account
- a bank account wherein the depositor
can write checks.
Check
- is an instrument that orders a bank
(drawee) to pay the person named on the
check or the bearer thereof (payee) a
definite amount of money from the
drawer’s bank account.
A current or checking account can be either of
the following:
a. Basic Checking Account - usually do not
pay interest.
b. Interest-bearing Checking Account - pays
interest just like a savings account.
Instead of a passbook, the depositor in a
checking account receives a “checkbook” – a
booklet containing preprinted blank checks.
Checkbooks are not free though; the bank
charges the depositor for every checkbook
requested from the bank. Some checking
accounts, however, come with either an ATM
card or passbook or both.
The bank issues a bank statement to the
depositor every month. The bank statement
shows the deposits and withdrawals during the
period and the cumulative balance in the
depositor’s bank account.
The requirements and fees for a checking
account are similar to those of a savings account.
However, the initial deposit and maintaining
balance may be higher for a checking account.
3. Time deposit (or Certificate of deposit or Term
deposit)
- refers to an interest-bearing fund
maintained at a bank for a fixed period
of time (e.g., 30 days, 60 days, 90 days,
etc.).
- A time deposit is similar to a savings
account, but it earns higher interest.
Moreover, a time deposit is
 denominated in fixed amounts, and
normally, cannot be withdrawn until its
maturity date. A time deposit is
evidenced by a “Certificate of Time
Deposit.”
PREPARATION OF CHECKS
A check is an instrument that orders a bank (drawee) to
pay the person named on the check or the bearer thereof
(payee) a definite amount of money from the drawer’s
bank account.
The following are the three parties in a check:
1. Drawer – the one writing the check and also
the one whose signature appears on the check.
The drawer is the one instructing the drawee to
pay the payee the amount stated on the check
from the drawer’s bank account.
2. Payee – the one who is named on the check or
the bearer thereof and is entitled to payment
from the drawee.
3. Drawee – the bank in which the drawer’s
bank account is maintained.
Other parts of the check:
1. Date – normally a check is dated as at the date
it was written. However, there may be cases
where a check is dated at an earlier or later date.
Such check is referred to as either antedated or
postdated.
 Antedated check is a check dated at an
earlier date.
 Postdated check is a check dated at a
later date.
The payee cannot present a check for
payment before the date stated on the check.
Thus, a payee cannot encash a postdated check
until the date stated on the check.
A check that has not been encashed for a
period of 6 months or longer from its date is
called a stale check.
a. A check written today and dated
January 1, 20x1 is a regular check
b. A check written today and dated
November 1, 20x0 is an antedated check
c. A check written today and dated
February 1, 20x1 is a postdated check
d. If you have a check (received from a
customer) that is dated April 1, 20x0,
that check is a stale check. You better
return the check to the customer and
have it replaced because the bank will
not encash that check
2. Amount in numbers and amount in words –
the amount to be paid to the payee is stated both
in numbers and in words. These should tally.
Traditionally, writing amounts in
numbers and in words serves as a checking
device for the bank. If there is a discrepancy
between the amount in words and in numbers,
the bank places more importance to the amount
in words, because, logically, it is more difficult
to commit an error in words.
However, it should be noted that banks
nowadays are very strict such that any error,
erasure, unclear writing or unnecessary
markings (even if signed) can invalidate the
check. So, always be careful when writing
checks. NO ERASURES ALLOWED. If you
commit an error, cross out the check and
prepare a new one. However, do not dispose
crossed-out checks; you should retain them for
future reconciliation purposes.
Moreover, banks encourage the use of
black ink when writing checks. They tend to
discourage the use of blue, red, green, pink, or
other inks. The use of pencil is prohibited.
3. Signature – For a sole proprietorship business,
there is only one signatory for the check, which
is the sole proprietor. However, for
partnerships, corporations or cooperatives
where there is more than one owner of the
business, it is a good internal control to practice
at least two signatories on all checks written. In
a corporate setting, the signatories are normally
the Chief Executive Officer (CEO) and the
Treasurer. In a partnership, the signatories are
normally the managing partner and another
non-managing partner. This is to ensure that
check disbursements are properly authorized.
When signing a check, be sure that your
signature matches the signature specimens
(normally 3 signatures) that you have submitted
to the bank when you opened your account. If
the signature on the check does not match any of
the specimens, the bank will not honor the
check.
DEPOSITS AND WITHDRAWALS
With the development of technology, transactions in a
bank are done in automated machines or electronically.
But there are some banks that still use the traditional
way of filling out deposit and withdrawal slips.
BANK STATEMENT
A report issued by a bank on a monthly basis that shows
the deposits and withdrawals during the period and the
cumulative balance of the depositor’s bank account. The
deposit and income (credit column) increases the
balance, while withdrawal and other deductions (debit
column) decreases the balance of deposits.

A bank statement is a report issues by a bank (on a

monthly basis) that shows the deposits and withdrawals
during the period and the cumulative balance of a
depositor’s bank account.