Checking Accounts vs Savings Accounts

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary reason businesses maintain bank accounts?

To invest in financial instruments

To make payments to suppliers

To earn interest on their deposits

To safeguard their assets (correct)

What type of account is used for daily transactions?

Savings Account

Checking Account (correct)

Investment Account

Time Deposit

What is required from clients when opening a bank account?

An information sheet and one or two valid identification cards (correct)

Only a signature card

A minimum deposit amount

Only one valid identification card

Why are payments to suppliers made through checks?

For security reasons Signup and view all the answers

What is the purpose of a signature card in banking?

To serve as a reference for every transaction Signup and view all the answers

What is the main advantage of not keeping too much cash in business premises?

It reduces the risk of asset loss Signup and view all the answers

What type of document is used to log transactions in some savings accounts?

Passbook Signup and view all the answers

What happens when the balance of a savings account falls below the required minimum amount?

Bank charges are imposed at the end of the month. Signup and view all the answers

What is the primary purpose of a savings account?

To provide an incentive for the depositor to save money. Signup and view all the answers

What is required from all signatories in a joint account?

A signature card for the bank's records. Signup and view all the answers

Can a foreigner open a bank account in the Philippines?

Yes, but only for certain types of accounts. Signup and view all the answers

What is typically offered alongside a passbook in some savings accounts?

An ATM Card. Signup and view all the answers

What is the primary purpose of a bank statement in a checking account?

To provide a record of deposits and withdrawals Signup and view all the answers

What is the main characteristic of a time deposit?

It has a fixed interest rate and maturity date Signup and view all the answers

What is the primary means of withdrawal from a checking account?

Issuing a check Signup and view all the answers

What is the benefit of a checking account for businesses?

It provides a clear record of deposits and withdrawals Signup and view all the answers

What is a characteristic of a checking account's interest rate compared to a savings account?

It is lower Signup and view all the answers

What is typically included with a bank statement in a checking account?

A list of all checks issued during the month Signup and view all the answers

Study Notes

Effective internal control protects business assets by minimizing cash kept on premises; only essential petty cash should be retained.
Payments to suppliers are typically made via checks for enhanced security.
Businesses generally maintain bank accounts to secure assets.

Types of Bank Accounts

Savings Account
- Designed to encourage saving by offering interest slightly above checking accounts.
- Depositors can make withdrawals and deposits using a specific form.
- Some accounts may include a passbook for transaction logging and an ATM card for easier access.
- Monthly bank charges apply if the balance falls below a stipulated minimum.
Checking Account (Current Account)
- Allows for withdrawals through checks and generally associated with a passbook.
- Unlimited deposits and numerous withdrawals are permitted, but interest rates are usually lower than savings accounts.
- Monthly bank statements detail beginning balance, deposits, issued and cleared checks, and month-end balance.
- Clear records in statements aid businesses in tracking financial activities.
Time Deposit
- Also known as Certificate of Deposit, this account offers fixed interest rates on deposited funds.
- Considered an investment option, yielding higher interest than regular savings accounts.
- Funds are locked in for a predetermined term until maturity.

Opening a Bank Account

Clients must complete an information sheet providing personal details including name, address, contact number, birth date, occupation, and family info.
Submission of one or two valid identification cards is required.
A signature card must be signed for reference in all transactions.
Multiple signatories must have individual signature cards.
Businesses can register accounts under their official business names, requiring documentation such as business permits and SEC registration.

Foreigners and Bank Accounts

Foreign individuals can open bank accounts in the Philippines.
Account options available may depend on the foreigner’s status.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Learn about the characteristics of a checking account, including withdrawal methods, interest rates, and deposit/withdrawal limits. Compare and contrast with savings accounts to understand the differences between these two types of bank accounts.