Topic 1 - Payment Methods Flashcards by Jas Stanley

Q

What is a drawer? (Cheques)

A

The company/person who is writing and sending the cheque

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Q

What is a drawee? (Cheques)

A

The bank who is processing the cheque

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Q

What is a payee? (Cheques)

A

The company/person who is receiving the money

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Q

If a balance is bought forward is that the opening or closing balance?

A

Opening balance

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Q

If a balance is carried forward is that an opening balance or closing balance?

A

Closing balance

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Q

Bank statements are from the banks perspective, if there is £100 in the account, would it be a debit or a credit from the banks perspective?

A

Credit because from the bank perspective they owe us this £100

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Q

Bank statements are from the banks perspective, if there is -£100 in the account, would it be a debit or a credit from the banks perspective?

A

Debit because from the bank’s perspective we owe this money back to the bank

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Q

When you pay in cash and fill in paying in slip… what must you do?

A

You must count how many of each coin and note you have and fill this in on the paying in slip

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Q

What is a counter credit?

A

A counter credit is when you pay in money in store at the bank

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Q

What must you do to set up a direct debit?

A

Fill in a direct debit mandate

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Q

What is a clearing system?

A

A clearing system is a system set up by major banks to derail with cheques

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Q

How long does it take for a BACS payment to be received by the recipient?

A

A few working days, but will leave the bank immediately

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Q

What affect does a cash withdrawal have on the bank balance?

A

Reduces the bank balance immediately

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Q

What affect does a debit card have on the bank balance?

A

Reduces the bank balance immediately

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Q

What affect does a direct debit have on the bank balance?

A

Reduces the bank balance immediately

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Q

What affect does a standing order have on the bank balance?

A

Reduces the bank balance immediately

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Q

What affect does a bank draft have on the bank balance?

A

Reduces the bank balance immediately

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Q

What affect does a BACS/direct credit have on the bank balance?

A

Reduces the bank balance immediately

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Q

What affect does a faster payment (FPS) have on the bank balance?

A

Reduces the bank balance immediately

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Q

What affect does BACS have on the bank balance?

A

Reduces the bank balance immediately

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Q

What affect does CHAPS have on the bank balance?

A

Reduces the bank balance immediately

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Q

What does BACS stand for?

A

Bankers automated clearing service

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Q

What does CHAPS stand for?

A

Clearing house automated payment system m

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Q

What affect does a cheque have on the bank balance?

A

Reduces the bank balance at a later date, because it can take a few working days to clear

What affect does a credit card have on the bank balance?

Reduced the bank balance at a later date when the amount is settled

What affect does a cash withdrawal from a petty cash float or till float have on the bank balance?

No affect on the bank balance

What affect does a dishonoured cheque have on the bank balance?

No affect in the bank balance because the cheque will have been refused either due to incorrect details or insufficient funds

What affect does a cash deposit have on the bank balance?

Affect the bank balance at a later date

What is an electronic payment?

The transfers between bank accounts

What is a paying in slip?

A small piece of paper which is kept by us when depositing cash or cheques into the bank for our reference

How long is a cheque valid for?

6 months

Can cheques be post-dated? (Dated after the actual date the cheque was written)

Yes, but it can’t be cashed sooner than the date on the cheque

What is the paying in sub/counterfoil?

A small piece of paper which is kept for our own records and our references from paying in a cheque

Does a cheque have to be written in words and figures?

Yes, to avoid manipulation

On the bank statements how will a cheque appear?

With their unique reference number which will match what is on the sub/counterfoil

What is a standing order?

A regular payment of the same amount that's paid on a specified date

What is a direct debit?

Is a regular payment of a amount which can vary but is paid on a specified date

What is a dishonoured cheque?

A cheque which has been refused by the bank usually for incorrect details or insufficient funds

What is a bank draft?

A guaranteed form of cheque which is drawn by the bank and usually incurs a fee. Also usually used for overseas

What payment method would you use for overseas?

Bank draft

What is CHAPS?

A guaranteed same day payment method, often used for high value purchases, like property/land It can’t be cancelled and there is no minimum or maximum charge

What payment method would you use for acquiring land/property?

CHAPS

What is BACS?

Online payment for the variable regular payments to multiple payees Can take 3 working days to process Usually used for wages

What payment method would you use for wages?

BACS

What is a faster payment (FPS)?

A same day payment which isn’t guaranteed and is usually used for small to medium sized payments

What does FPS stand for?

Faster payments

What payment method would you use for a online purchase?

Debit card

What payment method would you use for topping up petty cash?

Cash

What payment method would you use for regular insurance?

Standing order

What payment method would you use for phone bill with variable cost?

Direct debit

What payment method would you use for a regular fixed amount cost?

Standing order

What payment method would you use for a same day guaranteed payment?

CHAPS

What payment method can you not cancel?

CHAPS

What payment method can you not cancel?

CHAPS

What payment method would you use for high value purchases?

CHAPS

What payment method is guaranteed form of cheque?

Bank draft

What payment method would you use for small to medium sized payments?

FPS/Faster payments

What payment method would you use for settling an invoice?

BACS

How long does it take for FPS/faster payment to clear?

Usually a few hours