Chapter 7 Financial Management

How do banks earn most of their income

Banks earn most of their income by selling financial services. Most income that banks earn comes from the interest they charge when they lend money.

How do banks make borrowing easier

Banks make borrowing easier by helping money flow from savers to borrowers. Banks buy financial information about people asking for loans and make sure savers earn interest.

How does a bank earn income from checking accounts

The bank earns income from checking accounts by charging maintenance fees and a service charge. A maintenance fee is a flat fee for maintaining your account. A service charge is for each check you write.

How do you make a deposit in your checking account

You can make a deposit in your checking account by filling out a deposit form, recording your deposit and clearing the deposit.

Why might you use a money order to make a small payment by mail

You may use a money order to make a small payment by mail because you can speed your order. When the bank receives your payment, it will send your purchase immediately because it knows the money order is good.

What benefits do you receive from depositing your money in a bank

You receive security by guards, vaults, and security systems. Banks also protect your purchasing power and regulate your money.

Why should you compare your check register entries to your bank statement

You should compare your check register entries to your bank statement to balance or reconciling your account.

How should you write a check

You should write a check in ink, clearly, and show cents in fraction form. Write in the left of spaces and fill out the date, name of payee, amount, and your signature.

What does your bank statement tell you

Your bank statement tells you all the transactions and bank fees for the month.

If you lose your traveler's checks, what must you do to get replacements

If you lose your traveler's check, you must contact an office of the company that issued the check. The company will give you new ones.

What is a PIN and what is it for

A PIN is a personal identification number and is a secret number used to identify an owner of a card (at an ATM).

Why might a business be unwilling to accept a personal check as payment for a purchase

A business may be unwilling to accept a personal check as payment because your personal check does not guarantee that you have enough on deposit to cover the check.

What records serve as proof of a checking account transaction

A canceled check serves as proof of a checking account transaction.

How is a certified check different from a cashier's check

A certified check is a personal check that has been stamped and signed by a bank officer. The stamp and signature guarantee that your account has the money to cover the check. A cashier's check is a bank's own personal check signed by the bank's cashier. Payment of this check comes from the bank's own money.

What is a debit card

A debit cards are basically electronic checks.

How can banks help protect the purchasing power of your money

Bank can help protect the purchasing power of your money by using interest. The interest you receive from your bank deposit helps to protect the purchasing power of your money.

How does a safe deposit box protect your important papers and valuable possessions

A safe deposit box protect your important papers and valuable possessions because they have individual locks that you may rent from a bank. They are kept in a vault where the box is protected from fire, theft and loss.

How do traveler's checks work

A travelers check are checks that you pay for in advance, and if they are lost or stolen, the company that you bought them from replaces them.

In what situation might a wire transaction be a better choice than sending a check through the mail

A wire transaction may be a better choice than sending a check through the mail when making large transactions. Wire transactions are faster than mail, and you would lose less interest.

What happens to a check after you cash it

After you cash a check, you must endorse it. To endorse it, you must sign the back, which acknowledges that you received the money or transferred the money.

How does using an ATM help you and the bank

An ATM is an automatic teller machine. This can help quickly and efficiently draw money and do the job of a teller.

What is an EFT

An EFT is electronic funds transfer. This means a computer sends an electronic message to another computer to deduct money from one account and into another account.

What is automatic bill paying and how does in work

Automatic bill paying is a system for paying recurring bills by phone. First, you tell the banks that you wish to pay bills by phone. Then, you set up an account for paying bills over the phone. Next, dial the number and pay the bill. Record the transaction.

Which types of transactions should you record in the Payment/ Debit column of your check register. Which types of in the Deposit/ Credit column

For the Deposit/ Credit column, record the interest and the amount of the deposit added. For the Payment/ Debit column, record the interest and the amount of the deposit subtracted.

How is the Internet becoming part of banking now and in the future

The internet is becoming part of banking now and in the future because you can pay bills and complete transactions online.

What is the purpose of completing an account reconciliation form

The purpose of completing an account reconciliation form is to find any differences between the statement and our check register.

What is the purpose of a check register

The purpose of the check register is to record your transactions.

What should you do to protect your money when using an ATM

To protect your money when using an ATM, do not share your PIN, report a lost ATM card, and use an ATM with a friend near by.

What are two forms of money. What are the benefits of each

Two forms of money are currency and checks. Currency is paper money and coins used for financial transactions. This is used for small payments. Check is an order to a bank to pay a specified sum to a person. Checks are easier to make large payments.

What are our rights and responsibilities under the Electronic Funds Transfer Act

Under the Electronic Funds Transfer Act, banks must inform customers of fees associated with EFTs. The bank must offer customers a receipt to verify every electronic transaction. Customers must use EFTs responsibility. You must report a lost ATM card within two days.

What is FDIC

What does it do? FDIC is the Federal Deposit Insurance Corporation. This government run organization insures deposits in most banks up to $100,00.