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Banking

Business Practices- Chapter 14

TermDefinition
Payee who a check is written to; person named on check as the recipient of the amount shown
Drawer person who signs the check
Drawee the bank/financial institution from where the money comes from
Money order Face value plus a fee. Issued by banks, post offices, convenience stores
ABA Number Bank identification number that is printed on checks
ATM Public computer terminal used for banking transactions
Bank Statement Monthly itemization of all transactions on a checking or savings account
Deposit Funds added to a bank account
Endorsement Payee signature on the back of the check
Check Written order to pay funds from a personal or business bank account
Credit Money deposited to a bank account
Currency Paper bills and coins in circulation
Debit Money withdrawn from a bank account
Forgery Fraudulent signature or instrument
Limited check Check that is void if written over a certain amount
Overdraft Charge against an account in excess of the available funds
Reconciliation Verifying an account balance by comparing the bank statement to the customer's transaction records
Savings Account Interest-bearing account that usually does not offer check writing capability
Service Charge Bank fee assessment for processing transactions and account maintenance
Withdrawal Removal of funds
To find a Transposition error Divide the difference by 9
Check writer machine A machine that imprints figures on a check so that they cannot be changed
Prepaid Card A special card that has money pre-loaded on to it
When using an after hours deposit feature, the money is deposited in the account The following morning
Bank by mail A bank service where deposits are mailed by the customer to the bank to their account. Checks should include restrictive endorsements that state “For deposit only”
Warrant Check A check is that is not considered negotiable until it is converted into a negotiable instrument, a written order promising to pay a specific sum. Government and civic agencies may issue warrant checks.
Restrictive Endorsement Contains phrase “For Deposit Only”; Sign/name stamp “Pay to the order”
Full Endorsement Third-party check; Used when a check is to be transferred to another person or company The bearer to which the check is made out to writes “Pay to the Order of” and sign their name
Blank Endorsement Payee signs name on back; most common way pf endorsing a check
Businesses are more vulnerable to check fraud on Friday afternoons and weekends
A check stub can also be used as a check register
Bank transactions and financial documents Involve privileged and confidential information, and should be kept in locked files
Bank Statement should be reviewed with the physician on a monthly basis
Deposits made to an account Credit the account (add to balance)
Withdrawals made on an account Debit the account (subtract from the balance)
Endorsement When the payee writes his or her name as it appears on the front of the check
Electronic Check A check that has been created from a digital image of the original
Automatic Bill Paying Bank is given permission by account holder to release funds Substitute for check writing
Electronic Funds Transfer System (EFTS) Method of transferring funds using computers, enables funds to be debited, credited, or transferred; Pre-authorized automatic transfers; can set up for a certain day & amount each month
Point-of-Sale Banking System (POS) Use of debit card or prepaid card Instant transfer of funds
Automatic Funds Transfer Regular withdrawals of funds form one account and transferring them to another account, in specific amounts, at specific times
Stale Check A check that is so old when presented for payment that it is no longer valid
Check A check is negotiable, that is legally transferable to another person by endorsement; does not need to be signed by the bank
Cashier's Check Drawn by bank, made payable out of the payee’s account and signed by authorized bank official; considered to be good as cash
Certified Check A customer’s check may be presented to the bank for authentication and guarantee making it certified. Bank withdraws the money, sets it aside until check is presented.
Counter Check One available at the bank for the depositor to draw funds from his or her own account. Wording on the check “Pay to the Order of Myself Only”
Limited Check Bears a statement that indicates he check is void if written over a certain amount. Specifies a time limit during which it is negotiable.
Traveler's Check Developed for use while traveling, in situations where personal checks may not be accepted, or as a substitute for carrying large amounts of cash.
Voucher Check A check that is available in a variety of styles. Includes either a sub or a way to keep a duplicate copy of the check.
Intent to defraud A check written with the knowledge that there is not sufficient money to cover it. It’s unlawful.
Bank Deposits Preparing daily bank deposits is one of the medical office’s routine chores.
Direct Deposit Program An automatic deposit of wages or benefits
Checkbook Register Prevents overdrafts, records credits and debits
Incorrect Payee's Name Should be endorsed 2x’s- once with incorrect spelling & second with correct spelling of name
Missing payer's signature Call patient as to come into office to sign or to send a new check
Variable amounts on a check Numerical and written amounts should agree; bank will only credit the written out amount
Bank Statement Balance Differences Check for omission of check written or bank transaction; omission or unrecorded deposit; incorrect amount written on check register; mathematical errors
Financial transactions involve cash, credit, and checks
Federal law allows a business to convert a paper check into an electronic check
Third party checks Many banks do not accept
When choosing a PIN for use with a bank account be sure to memorize it so it won't be written down where another person could see it
Created by: MsKim6399