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Checking Account
Simulation
Understanding Checking Accounts
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
What is a Checking
Account?
Tool used to transfer funds deposited into the account to make a cash purchase
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Benefits
Can help to manage money
Written record of expenses
Check register
Makes bill paying more convenient
Reduces the need to carry large amounts of cash
Most liquid of cash management tools
Considered cash
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
How Do They Work?
Money is deposited into the account with a deposit
slip
Pay the transaction by:
Writing a check
Using an ATM and/or debit card
Using electronic banking
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
What is a Check?
Piece of paper pre-printed with the account holder‟s:
Name
Address
Financial institution
Identification numbers
Used at the time of purchase as the form of payment
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Bouncing a Check
Check written for an amount over the current balance held in the account „Bounces‟ due to insufficient funds
Assessed fee
Can cause harm to credit report
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Other Checking
Components
Register
Place to immediately record all monetary transactions for
a checking account
Written checks, ATM withdrawals, debit card purchases,
deposits, fees, etc.
Checkbook
Contains the checks and the register to track monetary
transactions
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Endorsing a Check
Endorsement
Signature on the back of the check from receiving person approving it for
deposit
A check must be endorsed to be deposited
Three types
Blank
Restrictive
Special
Safest way to endorse the check is to wait until going to the
financial institution to deposit or cash the check
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Blank Endorsement
Receiver of the check signs
his/her name
Anyone can cash or deposit
the check after has been
signed
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Restrictive Endorsement
More secure than blank
endorsement
Receiver writes “for
deposit only” above
his/her signature
Allows the check to only be
deposited
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Special Endorsement
Receiver signs and writes
“pay to the order of (fill in
person‟s name)”
Allows the check to be
transferred to a second
party
Also known as a two-party
check
Hand out check books
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Making a Deposit
Deposit slip
Contains the account holder‟s account number and
allows money to be deposited into the correct account
Checks must be endorsed to deposit
Record deposit in the check register
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Deposit slips
At back of check book
Rip out a deposit slip and follow along with simulation
Write Date
You have five checks to deposit- write them on deposit slip You will have to use the back of the deposit slip and transfer total to
the front
Check #365- $50.00
Check #101- $23.00
Check # 231- $47.00
Check # 598- $30.00
Check # 432- $15.00
Continue on next slide
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Deposit slips continued
You would like to receive $25.00 cash back from
deposit.
Write in less cash received
Subtract from subtotal to get net deposit
Sign Deposit slip for cash back
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Writing a Check
A check is given as a form of payment Funds taken out of checking account
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Writing a check
Rip out a check and follow along You want to buy a hoodie from the school store they
cost $30.00.
Write a check to the Silver Dollar for the hoodie.
Step one- Fill in Date
Step two- Payee- Silver Dollar
Step three- Amount of check in numbers
Step four- Amount of check in words
Step five- Memo- Hoodie
Step six- Sign check
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Check Register
Place to immediately record all monetary
transactions for a checking account
Written checks, ATM withdrawals, debit card purchases,
deposits, fees, etc.
Used to keep a running balance of the account
Remember -
Record every transaction!
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Check Register
Date
The date the check was written or transaction was made
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Check Register
Number
The number of the written check; if a debit card or ATM
was used, write DC or ATM
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Check Register
Description of Transaction The person/business the check was written to or where the debit card was
used
Gray line can be used to write the memo
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Check Register
Payment/Debit(-)
Amount of the transaction
Deducted from the balance
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Check Register
Deposit/Credit(+)
Amount of the transaction
Added to the balance
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Check Register
√ T
A box used to track whether the check has cleared on the monthly bank
statement when reconciling at the end of each month
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Check Register
Fee (if any)
Any extra fees charged to the account
Listed on the bank statement
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Check Register
Balance The running total of the checking account
Calculated by adding or subtracting each transaction
Keep this updated
© Family Economics & Financial Education – Revised October 2004 – Financial Institutions Unit – Checking Account Simulation
Funded by a grant from Take Charge America, Inc. to the Department of Health and Human Development at Montana State University – Bozeman
1.7.1.G1
Checkbook Simulation