Basic Documents and

Transactions Related to
Bank Deposits
• 1. Discuss the types of bank accounts normally maintained by a business and differentiate

• Business usually maintain two types of account: (1) savings account , and (2) checking or current account

• 1. 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

• 2. 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• Money held under a checking account can be withdrawn through issuance of a check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.
• The teacher may also introduce 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savings account that is held for a fixed-term and can be withdrawn only after the lapse of the agreed period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 The account may be withdrawn also anytime however the bank usually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.

• 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the funds can be withdrawn anytime.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.

• 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
• 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
• 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 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.

• 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.
• 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.
• Sample of a Bank Statement

• 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. 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.