FUNDAMENTALS OF ACCOUNTING 2
Bank allows
L1: Financial Analysis and Ratio
L2: Bank Accounts
Bank - a financial institution licensed to
accept cash deposits from the public
and
make loans. They are involved in
financial services such as lending
activities to for personal and business
needs.
Kinds of Bank
1. Retail Bank
2. Commercial or Corporate Bank
3. Investment Bank
Automated Teller Machine (ATM Card) – a
small ID-type card use by a depositor to
withdraw cash from the SA.
Types of Bank Accounts
1. Savings Account (SA) - most common
type of bank account. This account is used
mainly for safekeeping. This account is the
easiest account to open in a bank.
Individuals and business could avail this
type of bank account. Bank issues an ATM
Card as evidenced of deposit.
2. Current Account (CA) - also a common
type of bank account. CA is also
provided by an ATM card. It has the
same feature of a Savings Account. CA
doesn’t have a maintaining balance. If
any, it is minimal in amount. This
account is usually used in payroll
account of employees. Bank does not issue
passbook for this kind of account and it
doesn’t even earn an interest.
3. Checking Account - type of account
where the depositor could withdraw
through issuance of check.
the use of check as form of payment
instead of using coins or bills. Checking
Account is suitable for business use for
control purposes. Bank issues passbook as
evidenced for the account.
4. Time Deposit/Investment Account -
some depositors open account where the
purpose is not for safekeeping, but to
bigger amount of interest. Depositor is
now considered as investor. Demand
deposits and Time deposits are included
in this kind of bank account. Bank
issues Certificate of Deposits to
depositors as evidenced. Due to the
nature of the account, depositors are
prohibited to withdraw money for a
certain period of time.
 Time deposit interest rates in the
Philippines can go higher than 1% up
to 3.50%. The higher the amount you
deposit and the longer you hold it in
the bank, the higher the interest you’ll
get.
5. Dollar Account and Other Foreign
Currency Accounts
6. Other Investment Account in Bank
(commodities, cryptocurrency, real estate,
stock, bonds, options)
Bank Statement
Contents of the Bank Statement
1. Date – represents the date when the
transaction occurred.
2. Code – this is a reference that bank uses
for to record the depositor’s transactions.
3. Description – column that describes the
kind of transaction
4. Reference – means number for depositor deposit. Anyone can deposit from
use. For check withdrawal, it is the check anyone’s account.
number. Withdrawal Slip - used to withdraw money
5. Withdrawals – are amounts that are from a passbook account.
deductions from the depositor’s balance. Only the depositor or account holder can
5.1.Check payments made by the only withdraw from the bank account.
depositor. These checks are presented by
the check payees to the bank for
encashment or for deposit to the payees’
bank account.
5.2.Bank Debits – it includes Bank
Service Charge, a service fee charged by the
bank from depositor’s account.
5.3.Bank error is a transaction error
made by the bank that decreased the
depositor’s account.
6. Deposits – this column represents
addition to depositor’s account. This is
usually consists of:
6.1. Cash and Check Deposits
6.2. Bank Credits – it includes Interest
Income. As discussed before, savings and
checking accounts earn interest but
minimal in amount.
6.3. Bank error is a transaction error
made by the bank that increased the
depositor’s account.
Deposit Slip - used by depositor as
evidenced of deposit. This is filled-up by
the depositor and submitted to the bank’s
teller for validation. Once validated, a copy
is given by the bank teller to the depositor.
Again, the copy should be validated. A not
validated deposit slip cannot be presented
as proof of deposit. The depositor’s
account is automatically increased as
a result of deposit. Deposit may be in
the form of check deposit or cash