Banking System: Money Transfer Methods

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Which method of transferring money is described as a plastic card with a sixteen digit card number and allows the user to make payments by transferring funds electronically from their bank account?

Bank Giro

Cheques

Cash

Credit Card (correct)

What issue is associated with using cash as a method of transferring money?

Potential post-dated or outdated transactions

Potential alteration by anyone other than the payee

Extended clearance time of 3-5 days

Fraud and money laundering (correct)

In the context of transferring money, what does BACS stand for?

Business Account Clearing System

Bank Automated Credit System

Bank Automated Cheque Service

Bankers Automated Clearing Service (correct)

Which method of transferring money involves a direct receipt of money into a person's bank account through a safe and convenient process?

Bank Giro Signup and view all the answers

What are the three parties involved in a cheque transaction?

The drawer, the drawee, and the payee Signup and view all the answers

Which method of transferring money is described as 'the most widely used method' but has an issue with security due to its susceptibility to theft and fraud?

Cash Signup and view all the answers

What is the primary purpose of the bank statement?

To provide a summary of transactions during the month Signup and view all the answers

Why might the bank balance differ from the balance in the cash book?

Due to errors in recording transactions in the cash book Signup and view all the answers

What are examples of items that may be entered in the cashbook but not yet on the bank statement?

Outstanding cheques and unrecorded deposits Signup and view all the answers

What is meant by 'unpresented or outstanding cheques'?

Cheques recorded in the cashbook but not yet presented for payment Signup and view all the answers

When are bank lodgements also known as unrecorded deposits?

When cheques are credited in the cashbook and deposited in the business bank account Signup and view all the answers

What might cause a difference between the bank balance and cash book balance?

Errors made in either the cashbook or on the bank statement Signup and view all the answers

What is the purpose of a bank reconciliation?

To identify discrepancies between the bank statement and cashbook balances Signup and view all the answers

When does interest received on savings or deposit accounts get recorded in the cashbook?

When the bank statement is received Signup and view all the answers

What is a common type of error in bank reconciliation?

Overstatement and understatement of receipts and payments Signup and view all the answers

What are standing orders in the context of banking?

Payments made by the business to the bank at regular intervals Signup and view all the answers

When are returned cheques typically recorded on the bank statement but not in the cashbook?

At the end of the month Signup and view all the answers

How are unrecorded receipts treated in bank reconciliation?

Debited in the cashbook Signup and view all the answers

What is the purpose of comparing the debit side of the cashbook with the credit side of the bank statement during bank reconciliation?

To identify unrecorded payments Signup and view all the answers

What should be done with items that appear on the bank statement but not in the cashbook during bank reconciliation?

They should be debited in the cashbook Signup and view all the answers

What is deducted from the current account at the end of the month as a service charge by the bank?

$5 for every cheque issued during the month Signup and view all the answers

'Receipts' mentioned in the text refer to what type of transactions?

Deposits made into the business's bank account Signup and view all the answers