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accounting 5

1. Description of the functions of a commercial bank.

A. It raises funds collecting deposits from business ant and consumers.

B. It makes loan to business and consumers.

C. Cashes cheques.

D. Facilitates money transactions such as wire transfer.

E. Issues debit cards and credit cards.

F. Offers online banking.

G. Stores valuables, particularly in safe deposit box.

2. Definition of the types of cheques listed below.

A. Certified cheques- A cheque certified to be good by the bank upon which it is drawn by the signature of usually the cashier or paying teller with the word certified or accepted across the face of the cheque

B. Post dated Cheque-This is a Cheque that cannot be cash without enough money in the bank

C. Stale dated Cheque-this is a Cheque that has been presented six months or more after date has been drawn

D. Crossed Cheque- Cheque, distinguished by the note 'A/c payee only' on the front, which should not be redeemed in cash by the credit institution specified on the cheque, in contrast to the Open cheque. Crossed cheques are only redeemed in conjunction with the credit note.

3. Definitions for parties directly related to a cheque.

A. Payee-This is the person how is going to receive the money when cheque is cashed.
B. Drawer-The drawer is the person who is paying or the persons who signs on the cheque
C. Drawee-This is the bank were the drawer has there account and the cheque will be cashed.

4. Definition for the two types of accounts.

A. Current Account-These are used for regular payments in and out of the bank. A cheque book is is given by the bank to the holder of this account. The holder of this account can write cheques to make payments. Current accounts do not usually earn interest.

B. Savings Account-This is a deposit account it is for putting money into the bank and not taken out quickly. Usually interest is given by the bank on money kept in savings account.

6. Primary purpose of a bank reconciliation statement.

The bank statement or report shows the beginning balance of cash at the start of the month, along with the cheques and any deposits received. Any other changes or addition to the bank balance are indicated by codes found in the statement.

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