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Opening a Checking Account
What type of bank will you choose?Skill 1
Types– Commercial Banks– Savings and Loans– Credit Unions
Services– Checking– Savings– Credit Cards– Loans– Safe-deposit boxes– Other services
How is your money protected?
Commercial Banks– FDIC Insurance (Federal Deposit Insurance Corporation)
Savings and Loans– Savings Assoc Insurance Fund
Credit Union– National Credit Union Admin.
All deposits protected up to $100,000 per institution by the Federal Govt. (Now $250,000)
Skill 2
Opening a Bank Savings or
Checking Account
Goals for Skill 2
How do we open a bank checking account? How do I complete a signature card? How do I complete a deposit slip for a
personal checking account or a savings account?
Vocabulary
ABA Number Forged signature Individual checking
account FDIC
Joint checking account
Personalized deposit slips
Signature card
Understanding the Job How do we pay our bills?
– Cash?– Don’t pay at all?– With money orders?– Go to the business in person?– Credit cards?
What if a credit card is not an option?
Write a check!
Why?
1. Convenient
2. Safer than cash
3. Provides a paper trail
Understanding the Job cont. What types of checking accounts are available at
a bank? Individual Checking account Joint Checking account Money Market Checking account
How do you decide which bank to choose? Is the bank convenient to your home or business?
Does the bank provide the services you need?
Does the bank charge for a checking account?
Is it FDIC insured?
Understanding the Job cont. What forms might you need to fill out
when you go to the bank?– Application
• Why? – To have all your current information on file.
– Signature Card• Why? – To prevent forged signatures
– Personalized Deposit Slips• Why? – Save time at the bank
• Less chance of bank or personal errors
• Contains the ABA Number
Let’s fill in the blank signature card
Understanding the Job cont.
1. Enter the date
2. Enter bills deposited
3. Enter coins deposited
4. Enter checks deposited
5. Calculate and enter the total.
Steps to fill out a deposit slip.
Fill in the Sample as we follow the steps.
Questions
Let’s Review
What do we need to do to open up a checking account?
How do we complete a signature card? What are the steps to complete a deposit
slip?
Practice Classwork/Homework
Application Problem Job 27 Define vocabulary words and put them in
your binder Points = 45
Skill 3
Endorsing Checks
Goals for Skill 3
How do I transfer a check from one party to another?
How do I cash and/or deposit a paycheck? How do I handle a split deposit of a check?
Vocabulary
Blank endorsement Canceled checks Clearinghouse Endorsement Full endorsement
Leading edge Negotiable Restrictive endorsement Split deposit Trailing edge
Understanding the Job What do you do with a check that
you receive?– Cash it– Deposit all of it– Deposit part of it
You need to transfer ownership from you to the bank by …?– Endorsement
• “Pay to the order of”
• Allows you to transfer ownership to another party– Bank
Understanding the Job cont. Why is a check considered negotiable?
– It can be transferred to another party– Just like money
What do you do with the check at the bank?– Trailing edge – 1 ½” of the top of the check where a
signature can be written (Left side of check front)
– Blank endorsement – signature only• What happens if you lose this signed check?
• A blank endorsement does not state who the check is being transferred to.
– MICR numbers are encoded onto the check
Follow me with demo problem Job 26
Understanding the Job cont.– The first bank (Manuel’s) endorses the check
Who goes to get the money from Marty’s bank?– The check is sent to a clearinghouse for processing– The clearinghouse computers read the MICR numbers and
complete the transactions– Money comes out of Marty’s bank and into Manuel’s– The second bank to touch the check (Clearinghouse)
endorses the check near the Leading Edge (Right side of check
front) of the check Now what happens to the check?
– Check goes back to Marty’s bank and money is taken from Marty’s account
– Check is now stamped “PAID” and becomes a cancelled check.
Understanding the Job cont. What other types of endorsements are
available to me?– Restrictive endorsement– Full endorsement
Let’s look at Restrictive with sample problem 2.
When would you use a Full endorsement?– You don’t have a bank account– You owe somebody money
Steps to endorse a check
1) Enter the check
2) Prepare the deposit slip
3) Record the deposit in the check register• Only if you put some of the check into your
account.
Let’s do the Job 26 Demo together
Questions
Let’s Review
How do I transfer a check from one party to another?
How do I cash and/or deposit a paycheck? How do I handle a split deposit of a check?
Let’s look at a Split Deposit with sample problem 3
Practice Classwork/Homework
Application Problem Job 26 Page 207 Points = 30 Quiz tomorrow on vocabulary.
Goals for Skill 4
How do I complete a check register for my checking account?
How do I write out checks for my checking account?
Packet page: Job 23 overheads
Vocabulary
Check Check register Check stub Checkbook Drawee Drawer
Issue Legible Payee Insufficient funds
(NSF) Postdated Void
Understanding the Job Now that you have a checking account, how do keep track
of all the checks you issue? (write out)– You use the checkbook
How do you know how much money you have in your account?
– Call the bank?– Check on-line?– Wait for a statement?– Keep a record of your transactions!
What is a check stub for a business account? A check register?
– A type of permanent record Why is it important to fill it out?
– To keep accurate records
Understanding the Job cont. Who are the three parties involved in a
check.– Drawer – the person who writes the check– Drawee – the bank that is ordered to pay on the check– Payee – the person who is to be paid
How do you issue a check?
Let’s look at the Practical Money Skills overhead.
Follow the steps on the next slide.
Understanding the Job cont.
Always use ink. (WHY?) Write legibly. Use the current date. (Don’t Postdate) Write the name of the payee. Write the amount of the check in figures. Write the amount of the check in words. Enter a memo if applicable. Sign your name.
Steps to writing a check.
Understanding the Job cont. What happens if you make a mistake?
– Panic?– Throw the check away?– Use wite out?– Cross it out and do it again?– NO!– Write VOID across the check and retain it.
Let’s do a sample problem
What is a check protector?
Questions
Goals for Skill 5
How do I complete the check register for my personal checking account?
How do I write a check for less than one dollar?
Understanding the Job When you write checks out with a stub, the
checks are attached to the stub and everything is right in front of you.
When you write checks for your personal account, the checks and records are separate.
The records are put in a check register using a three step method.
Let’s continue with the activity we already started
Understanding the Job What happens when you are told you
have “insufficient funds”?– You don’t have enough money in your account– You may bounce checks– Your payees will be very upset with you– You may not get loans or credit from the bank– You may get fined and/or go to jail
Understanding the Job cont. How do we avoid this situation?
– Make more deposits– Keep your checkbook accurate and up to date– Don’t write checks if you know you don’t have any $– Be aware of Check 21 policy?
Let’s try another problem 26-5 handout
Questions
Let’s Review Who are the three parties involved with a
check? What are the steps to follow when writing
out a check and filling in a register? What procedure do you follow when you
make a mistake writing a check. What are insufficient funds?
Try a few written exercises, p184 handout.
Practice Classwork/Homework
Application Problems Job 25-4 Page 200-201
Points = 90 Quiz tomorrow on vocabulary.
Skill 6
Writing a check for less than a dollar
Understanding the Job cont. How do I write a check for less than one dollar?
– Use the steps from a typical check writing activity except…
1. Use the words Only in front of the written words.
2. Cross out the word Dollars on the check.
3. Be sure to be accurate.
Why would I write a check for less than one dollar?
– Shipping and handling on an item– Copies from an archive
Let’s practice a few on p198 handout
Questions
Let’s Review
What considerations must be followed when using a check register?
How do I write a check for less than one dollar?
What is the difference between the check register and the check stub?
Practice Classwork/Homework
Application Problems Job 25-1
Goals for Skill 7
How do I read a bank statement? How do I find which checks are
outstanding? How do I prepare a bank reconciliation
statement?
Vocabulary
Bank Reconciliation Statement
Bank Statement Bank Statement
Balance
Checkbook Balance Outstanding Checks Reconciled
Understanding the Job What do banks do with all those
cancelled checks?– Throw them away?– Send them back one by one?– No, they send them back to you once a month.
Along with the checks is a statement of your account.– It lists all the activity during the month
Understanding the Job cont. What information is on the statement?
– Bank statement balance– Deposits– Withdrawals– Checks written – Service Charges– And the dates when all these activities happened
What do I do with this information?– Compare the bank statement balance with– The Checkbook balance
Understanding the Job cont. What if they don’t match?
– You need to reconcile the account (bring into agreement).– Using the bank reconciliation statement.
Let’s look at the sample problem on the overheads for guidance.
Follow the steps on the next slide.
Steps to Reconcile
1. Compare the deposits.
2. Arrange the canceled checks in order.
3. Compare the canceled checks with the stubs.
4. Find the outstanding checks.
5. Prepare a bank reconciliation statement.
Let’s do “Learn by Doing” handout together.
Questions
Let’s Review
What are the parts of a bank statement? Which checks are outstanding? How do I reconcile a bank statement?
– What are the steps?
Practice Classwork/Homework
Demonstration Problem Job 28 Points = 45
No Quiz tomorrow on vocabulary.
Skill 8
Handling Outstanding Deposits
Goals for Skill 8
How do I prepare a bank reconciliation statement when a deposit is outstanding?
How do I use a bank-supplied reconciliation form?
Vocabulary
Outstanding Deposit
Understanding the Job What happens when you make a
deposit into your account and it doesn’t appear on the bank statement?– Call the bank and complain?– Figure the bank made a mistake?– Maybe you didn’t put the money in the right account?– No, you need to reconcile your checkbook.
Let’s take a look at the sample problem?
p221 handout
Understanding the Job cont. How can I use the reconciliation
sheet supplied to me by the bank?
1. Compare the deposits
2. Complete the reconciliation.
3. Compare the canceled checks
Same steps we used to complete Job 28.
Check out the sample problem.
p222 handout
Questions
Let’s Review
How do I prepare a bank reconciliation statement when a deposit is outstanding?
How do I use a bank-supplied reconciliation form?
Practice Classwork/Homework
Demonstration Problem Job 29-1 Points = 40
No Quiz tomorrow on Job 29 and vocabulary.
Skill 9
Handling Bank Service Charges, Interest, and Errors
Goals for Skill 9
How do I prepare a bank reconciliation statement with bank service charges and interest earned?
How do I correct errors made in my checking account?
Vocabulary
Interest
Understanding the Job In the previous two jobs we have prepared
a bank reconciliation statement when checks and deposits were outstanding.– We recorded the activities but the bank had
not.
Now, we need to make adjustments to our checkbook for activities involving fees, interest, and errors.– The bank has recorded the activities but we
have not.
Steps to handle: Service Charges, Interest, and Errors
1. Enter the heading and balances; handle outstanding deposits and checks. (Jobs 28-29)
2. Subtract the service charge from the checkbook balance.
3. Add the interest earned to the checkbook balance.
4. Handle any errors.5. Finish the bank reconciliation statement.6. Correct your check stubs or check register.
Sooooo…
Item Treatment
Outstanding Checks
Outstanding Deposits
Bank Service Charge
Interest
Subtract from bank statement
Add to bank statement balance
Subtract from checkbook balance
Add to checkbook balance
Questions
Let’s Review
How do I prepare a bank reconciliation statement with bank service charges and interest earned?
How do I correct errors made in my checking account?
Practice Classwork/Homework
Demonstration Problem Job 30-1 Points = 25 Quiz tomorrow on vocabulary.
