17.3 - Checks and Payment Methods Flashcards Preview

Intro to Business > 17.3 - Checks and Payment Methods > Flashcards

Flashcards in 17.3 - Checks and Payment Methods Deck (89):
1

when two or more people have an account together

joint account

2

a copy of the check that is automatically created when you write the check

duplicate copy aka carbon copy

3

What are the 3 main types of endorsements?

  1. blank endorsement
  2. full endorsement aka special endorsement
  3. restrictive endorsement

4

the bank's account ID code for electronic sorting and routing

routing/aba #

(9 digit code written at the bottom of all checks)

5

a form issued by various organizations including traveler's check companies, travel agencies, and many supermarkets, pharmacies, and convenience stores

express money order

6

  • a service by which a bank deducts a payment from your account and transfers the funds to the appropriate companies
  • this service requires a bank customer to authorize preset amounts of monthly expenses

automatic bill payment

7

if you make a mistake when writing a check, it is recommended that you ____

  • erase it and correct it
  • write 'stop payment' across the check
  • rip it up immediately
  • none of these choices

none of these choices

(should write 'void' on the check)

8

What are the 6 elements of a check?

  1. drawer
  2. payee
  3. drawee
  4. routing/ABA#
  5. account number
  6. memo

9

What is the purpose of a check register?

  • to keep track of all transactions of a checking account
  • includes checks written, debit card payments, cash withdrawals, and deposits
  • this lets you know exactly how much you have in your checking account at all times

10

you owe your bank money that you have spent when there was no money in your account

overdrawn account

(you have negative amount in your account)

11

a digital reproduction of an original paper check known as a ____ check

  • substitute
  • cashier's
  • certified
  • canceled

substitute

12

a report on the status of a bank account, usually sent monthly

bank statement

13

Who uses money orders?

normally a person who does not have a checking account and wants to send a payment through the mail

14

Why should you shop around for where to open an checking account?

  1. some banks charge a lot and high bank fees while other banks do not
  2. some banks give you interest earned on the money you have in your account while other banks do not

15

What are 8 tips that you should follow to avoid trouble when writing checks?

 

do not need to know word for word

  1. write checks only on the forms provided by your bank
  2. write checks in ink - helps prevent someone from erasing and entering different amount
  3. only write checks if money is available - writing a check for more money than what is in your account can result in an overdrawn account and will be charged a fee from bank
  4. use the current date
  5. avoid making checks payable to 'cash' or to 'bearer' - these checks can be cashed by anyone, instead write check to your own name
  6. always fill in the amount - if you leave it blank, you will be held responsible for whatever amount is written on check even if it is not correct
  7. void checks on which you make errors - do not try to erase or retrace your writing, just write 'void' across the check
  8. record EVERY payment from your checing account, whether the payment is by check, debit card or automatic payment

16

Balances shown in your account register and the bank statement may be different.  What are the most common reasons for the difference?

  • some of the checks you wrote may not have cleared (have not been paid by the bank yet)
  • you may have forgotten to record a transaction in your register like a ATM deposit, automatic bill payment, or debit card purchase
  • a service charge may appear on the bank statement
  • you may have mailed a deposit to the bank that has not been received yet
  • interest earned may have been added
  • you may have recorded the amount of a check incorrectly in the check register, you may have added or subtracted incorrectly

17

the bank or other financial institution that pays the check

drawee

18

If you make deposits and withdrawals at an ATM close to your work but forget to record the transactions in your bank register and overdraw your account, what could you do better?

  • you could keep your register with you at all times and record the transaction in it before using the ATM
  • you could save your receipts and record the transaction in your register when you get home
  • you could use online banking and check it regularly for items you forgot to record

19

a bank issued card used for ATM transactions

debit card

20

a fee a bank charges for handling a checking account

service charge

21

the owner of the account who signs the check

drawer

22

a device used for cash machine transactions

debit card

23

What do you do after  you have reconciled your bank statement?

you correct any errors that you made on your register, the new balance should now agree with the bank statement

 

24

a ____ endorsement makes a check payable to anyone who has the check

a blank endorsement makes a check payable to anyone who has the check

(so.... if you sign the back of a check and do not write anything else on it and then lose it, anyone who finds it can then cash it or deposit it in their account)

25

what does 'cleared' mean?

that it's been paid

26

a report sent by the bank to a depositor showing the status of his or her account

bank statement

27

a lost check made out to 'cash' can be cashed by anyone

  • true
  • false

true

28

a separate form on which the depositor keeps a record of deposits and checks

check register

29

  • what you fill out when you are depositing money
  • form lists all items you are depositing - currency (cash), coins or checks
  • form shows your name, account number, the date, items deposited and total amount of the deposit

deposit slip

30

if you endorse a check with only your name, you have created a ____ endorsement

  • blank
  • restrictive
  • full
  • special

blank

31

number to identify the account you own at your bank

account number

(written at the bottom of all checks)

32

Kim's bank statement shows a balance of $436.15 in her checking account.  Her check register lists checks for $25.11 and $11.33 that have not cleared.  There are no other outstanding deposits or payments.  What balance does her check register show?

  • $36.44
  • $472.59
  • $399.71
  • $436.15

$399.71

 

(436.15-25.11-11.33 = $399.71)

33

a written notice that tells the bank not to pay a certain check

stop payment order

 

(banks charge a high fee for stopping payment on a check so only use this process for good reason - ex. a check was stolen or lost)

34

a personal check with guaranteed payment is a

  • cashier's check
  • money order
  • certified check
  • traveler's check

certified check

35

What information do most bank statements contain?

 

see example...

  • the balance at the beginning of the month
  • the deposits made during the month
  • the checks paid by the bank during the month
  • any automated teller transactions (ATM) made during the month
  • any electronic fund transfers (EFT) or special payments the bank made
  • service charges for the month, including charges for services like stopping payment on a check or fee for overdrawn account
  • any interest earned on the account
  • the balance at the end of the month

A image thumb
36

a document used to verify your signature

signature card

37

a transaction in which a merchant accepts debit cards to pay for purchases

point-of-sale transaction (POS)

38

a form sold by a bank stating that money is to be paid to a specific person or business

bank money order

39

checks that have not been deducted from the bank statement balance

outstanding checks

40

How do you determine the true balance in your account?

  • subtract the total of the outstanding checks from the bank statement balance
  • add any deposits that have not been received by the bank yet
  • subtract service charges, fees and automatic payments from your checkbook balance
  • add any interest earned to your check register balance
  • if the balances do not agree, either you or your bank has made an error.  carefully go over all calculations in your check register and make sure everything on the statement is in the register

41

a digital reproduction of the original paper check, sometimes sent with bank statement (basically a photocopy of check)

substitute check

42

How does recording your signature when you open a checking account protect you and the bank?

  • it helps stop a person from cashing a check that was not written and signed by you (helps stop forged checks)
  • if a bank cashes a forged check, the bank must pay you the money back that was illegally taken

43

outstanding checks are checks that _____

  • the bank has guaranteed will be paid
  • have not cleared the bank as paid
  • travelers use outside the US
  • require an endorsement

have not cleared the bank as paid

44

check taken to the bank that is over 6 months old, the bank may refuse to accept it or have the person that wrote the check verify that it is still good

stale-dated check

45

why should you always fill out the check stub or register first when writing a check?

because if you write the check first you might forget to record the info into your register or stub and then not know who the check was written to or the amount, this would then mess up your balance in your register

46

an endorsement of a check that consists of only the endorser's name

blank endorsement

47

a ____ writes the check to the _____ who is paid from funds deposited with the _____

  • drawee; payee; drawer
  • drawer; payee; drawee
  • drawee; drawer; payee
  • drawer; drawee; payee

a drawer writes the check to the payee who is paid from funds deposited with the drawee

48

the line at the bottom of a check where you write the reason of check

memo

(ex. tennis lesson, electricity bill, shoes, etc)

49

writing a check for more than is in your account can result in a(n) _____

  • canceled check
  • overdrawn account
  • postdated check
  • stop payment order

overdrawn account

50

your _____ _____ should be used for maintaining a record of debit card payments, cash withdrawals and deposits

your check register should be used for maintaining a record of debit card payments, cash withdrawals and deposits

51

the first document that must be completed when opening a check account is the:

  • deposit slip
  • reconciliation statement
  • check register
  • signature card

signature card

52

today, signature cards are not actual _____.  instead, all your personal information is entered into computer system as well as your signature.

today, signature cards are not actual cards.  instead, all your personal information is entered into computer system as well as your signature.

53

What are the 7 steps to properly fill out a check?

 

 

don't need to know word for word

 

see sample check in answer

  1. write checks in order by number so you know which checks have been paid
  2. write the date in the proper space
  3. write the payee's name on the line following 'pay to the order of'.
  4. write the amount of the check in only numbers after the pritned dollar sign, write the amount close to the dollar sign to prevent someone from changing the amount, write the cents part close to the dollar numbers so additional numbers cannot be inserted (you wrote 101.35 but someone changed it to 1010.35 because you left room)
  5. write the dollar amount in words on the line below the payee's name, begin writing at the far left end of the line, draw a line from the written numbers to the cents to fill all unused space and prevent someone from adding more words (One hundred one dollars and -----------------35/100)
  6. write the purpose of the payment on the line at the bottom of the check
  7. sign checks with the same signature you wrote on the signature card

A image thumb
54

a written notice telling the bank not to pay a certain check

stop payment order

55

Who are the 3 parties shown on each check?

  • drawer
  • payee
  • drawee

56

how is a signature card used?

used to verify and compare your signatures if a bank suspects a forged check or when cashing a check that is for a high dollar amount

57

the process by which funds are deposited electronically and available automatically for your use

direct deposit

58

a statement showing hwo the checkbook balance and the bank statement were brought into agreement

bank reconciliation

59

checks that have not been deducted from the bank statement balance

outstanding checks

60

what is a forged check?

a check that someone took from a person and then signed their signature illegally

61

an endorsement that allows you to transfer a check to another person

full endorsement aka special endorsement

62

the use of computers and other technology for banking activities, including the use of automated teller machines (ATM), point of sale transactions, direct deposit, and automatic bill payment

Electronic funds transfer (EFT)

63

a personal check for which a bank has guaranteed payment, the bank stamps the front of the check and is signed or initialed by a bank officer

certified check

(the bank stamps the check which says that there are enough funds in your bank account to cover the amount of the check)

64

written evidence that you received payment or that you transferred your right of receiving payment to someone else

endorsement

65

account that two or more peoplel have together

joint account

66

What is required on a signature card?

  • legal name
  • address
  • phone number
  • social security number
  • driver's license number
  • email address
  • signature

67

  • a check that a bank draws on its own funds
  • service fee charged by the bank
  • these checks are more acceptable than a personal check

cashier's check

 

(the bank withdraws the money out of your account when you get the cashier's check and puts the money into the bank's account)

 

68

involves buying a message to direct a telegraph office to pay a sum of money to a certain person or business

telegraphic money order

69

a check that is dated later than the date on which it is written

postdated check

70

the person to whom the check is written

payee

71

actual checks that were paid during the month, sometimes included with bank statement

canceled checks

72

If your bank statement shows a balance of $401.19 and your register shows a balance of only $364.52, what are the most likely reasons?

  1. you forgot to record a deposit that you made
  2. you made a math error in your register
  3. you could have outstanding checks, EFT, POS or ATM transactions
  4. you could have earned interest and you did not record it in your register

73

a form of payment purchased from the US Post Office that can be sent safely through the mail

Postal Money Order

74

written evidence that a person received payment or transferred the right to receive payment to someone else

endorsement

75

why would you want to place a stop payment on a check?

  • if a check is lost in the mail
  • if a check was stolen

76

Why do you have to give a sample of your signature when you open a bank account?

so the bank can compare the signature on record to the signature on a check being cashed (normally a large dollar amount check) or when the bank suspects a forged check is being presented for payment

77

when you use a debit card to make a purchase, you are borrowing from the bank

  • true
  • false

false

(when you use your debit card you are using money from your checking account)

78

a ____ endorsement allows you to transfer a check to another person

a full endorsement allows you to transfer a check to another person

(you write the words 'Pay to the order of' then person's name then sign your name under it, now only the person you want to cash the check can - even if lost)

79

special ink used in checks so they cannot be copied

MICR ink

(Magnetic Ink Character Recognition)

80

a _____ endorsement limits the use of the check to the purpose given in the endorsement

a restrictive endorsement limits the use of the check to the purpose given in the endorsement

(ex. if you have several checks you want to mail to the bank, you could write 'for deposit only' then your signature, then your account number.  this only allows the checks to be deposited into your account.  if they get lost in the mail or stolen, no one can take them)

81

an endorsement that limits the use of the check to the purpose given in the endorsement

restrictive endorsement

82

the document created to show how your own record of your checking account and the bank's record of your account were brought into agreement (how they equal)

bank reconciliation

aka reconciling the bank balance

83

a form of payment that orders the issuing agency to pay the amount printed on the form to another party

money order

84

a form attached to the check by a perforated line

check stub

85

special forms designed for making payments when away from home, normally when traveling to another country

traveler's checks

 

  • can be bought at banks, credit unions and travel agencies.  these checks can be bought in certain amounts such as $10, $20, $50 and $100. 
  • these checks require your signature in two places - first you sign each one when they are bought and then again when you cash a check or pay for a purchase with it

86

true or false

you must sign traveler's checks at the time you purchase them

true

(and then sign again when you use them)

87

a separate book form on which the depositor keeps a record of checking account activities (deposits, withdraws, debit card purchases, etc), usually the same size as the checkbook

check register

88

before depositing a check, it must be _____

before depositing a check, it must be endorsed (signed on the back)

89

What kind of endorsement is required when a check is made out to two or more people?

restrictive endorsement - two signatures required

(both payees must sign the back of the check)