BANK TRANSACTION

GROUP 4
Bank Transaction

A bank transaction is any money that moves in or out of your bank account. Types of bank
transactions include cash withdrawals or deposits, checks, online payments, debit card charges,
wire transfers and loan payments.

What is transaction posting order?

Transaction posting order is the process of applying transactions—both debits and credits—to your
account balance. Posting order is important if there is not enough money in your account to pay all of the
transactions you initiate. The order can affect the number of transactions that overdraw your account or
that are returned unpaid, as well as the number of fees you may have to pay. Transactions can be posted
to your account in "batch" (a number of transactions posted at the same time at the end of the business
day) or in "real time” (transactions posted as they are made).
Types of Bank Accounts Normally Maintained by a Business 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.

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- Money held under a checking account can be withdrawn through issuance of a check.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.

Other Types of Bank Accounts

Time Deposit Account (or a Certificate of Deposit Account)
-Type of a savings account that is held for a fixed-term and can be withdrawn only after the lapse of the agreed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- The account may be withdrawn also anytime however the bank usually charges penalties.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
-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.
- 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 depositor’s account.
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

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.
Check (Cheque) Preparation
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.
 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.

More About Checks 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 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.
Bank Statement
At the end of every month, the bank furnishes a statement to the depositor showing
themovement of the account. It contains 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 date column indicate 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 deduction 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.
III. SUMMARY OF LESSON
• The types of bank accounts normally maintained by a business are savings
account and checking or current account.
• Other types of bank accounts are time deposit account and ATM account.
• A withdrawal slip is a written order to the bank to take out money from the
depositor's account.
• A deposit slip is a written order to the bank to put in money to the depositor’s
account.
• 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 bank furnishes a statement to the depositor showing the movement of the
account at
the end of every month called a bank statement.