Checking Accounts Section 24.1. Understanding Business and Personal Law Checking Accounts Section...

Checking Accounts Checking Accounts Section 24.1Section 24.1

Understanding Business and Personal Law


Writing Checks

Section 24.1Section 24.1Checking Accounts Checking Accounts

Section 24.2Section 24.2Other Payment Methods Other Payment Methods

2424ChapterChapter Writing ChecksWriting Checks



Writing Checks

What You’ll Learn

How to describe the process of opening a How to describe the process of opening a checking account and some of the checking account and some of the depositor’s rights (p. 522)depositor’s rights (p. 522)



Writing Checks

What You’ll Learn

How to explain the proper way to write a How to explain the proper way to write a check and discuss problems associated check and discuss problems associated with checking accounts (p. 524)with checking accounts (p. 524)

How to summarize the procedure for How to summarize the procedure for balancing a checkbook (p. 523)balancing a checkbook (p. 523)



Writing Checks

Why It’s Important

Knowing about checking accounts and Knowing about checking accounts and writing checks will help you use your money writing checks will help you use your money wisely.wisely.



Writing Checks

Legal Terms

stale check (p. 522)stale check (p. 522)outstanding checks (p. 523)outstanding checks (p. 523)bad check (p. 526)bad check (p. 526)forgery (p. 527)forgery (p. 527)uttering (p. 528)uttering (p. 528)



Writing Checks

Using a Checking Account Opening a Checking AccountBalancing Your CheckbookWriting Checks

Section OutlineSection Outline



Writing Checks

Pre-Learning Question Pre-Learning Question

How would you use a checking account?



Writing Checks

Checks are:Checks are:

Using a Checking Account Using a Checking Account

the most common kind of negotiable the most common kind of negotiable instrument in useinstrument in usea safe way to send funds through a safe way to send funds through the mailthe mailconvenient receipts for the people convenient receipts for the people who write them who write them



Writing Checks

To open a checking account, you To open a checking account, you

Opening a Checking Account Opening a Checking Account

deposit money in a bankdeposit money in a banksign a signature card sign a signature card



Writing Checks

Then the bank agrees to pay money Then the bank agrees to pay money out, up to the amount you have out, up to the amount you have deposited, when you write a check.deposited, when you write a check.




Writing Checks

A bank may refuse to pay a check that A bank may refuse to pay a check that is more than six months old without is more than six months old without incurring liability. incurring liability.

Such a check is known as a Such a check is known as a stale stale checkcheck..




Writing Checks

You should balance, or reconcile, your You should balance, or reconcile, your bank statement as soon as possible bank statement as soon as possible after receiving it. Carefully compare after receiving it. Carefully compare the check register balance with the the check register balance with the bank statement balance to make sure bank statement balance to make sure that they agree.that they agree.

Balancing Your Checkbook Balancing Your Checkbook



Writing Checks

Don’t forget to take into consideration Don’t forget to take into consideration outstanding checksoutstanding checks, or checks you , or checks you have written that have not yet been have written that have not yet been returned to the bank for payment.returned to the bank for payment.

Balancing Your Checkbook Balancing Your Checkbook



Writing Checks

Banks provide regular and special Banks provide regular and special printed check forms. These checks printed check forms. These checks display a series of numbers printed in display a series of numbers printed in magnetic ink that make it possible for magnetic ink that make it possible for computers to process the checks computers to process the checks quickly and accurately.quickly and accurately.

Writing a Check Writing a Check



Writing Checks

24.124.1

A Personal CheckA Personal Check



Writing Checks

A check is a draft drawn on a bank A check is a draft drawn on a bank and payable on demand. and payable on demand.

Parities to a Check Parities to a Check

DrawerDrawer—person who writes the check—person who writes the checkDraweeDrawee—bank ordered to pay the —bank ordered to pay the moneymoneyPayeePayee—person to whom the check is —person to whom the check is made payablemade payable



Writing Checks

To avoid negligence, you should write To avoid negligence, you should write checks that cannot be changed easily checks that cannot be changed easily or signed by a forger.or signed by a forger.

Avoiding Negligence Avoiding Negligence



Writing Checks

print the figures very close to the print the figures very close to the dollar signdollar signkeep all of the figures close togetherkeep all of the figures close togetheralways start at the extreme left always start at the extreme left when writing amounts of money in when writing amounts of money in wordswords

Steps for Writing a Check Steps for Writing a Check



Writing Checks

draw a line through any extra space draw a line through any extra space that remains after you’ve written the that remains after you’ve written the amountamountthis prevents someone from putting this prevents someone from putting in words and figures to alter the in words and figures to alter the value of the checkvalue of the check




Writing Checks

be sure figures are the same as be sure figures are the same as written amounts (if there is a written amounts (if there is a difference, the bank will honor the difference, the bank will honor the written amount)written amount)write the name of the payee close to write the name of the payee close to the words “Pay to the order of”the words “Pay to the order of”




Writing Checks

fill in all unused space with a linefill in all unused space with a linemake a note of the reason for the make a note of the reason for the checkcheck




Writing Checks

sign your name so that it looks as sign your name so that it looks as much as possible like the one on much as possible like the one on the bank signature cardthe bank signature cardnever sign a blank checknever sign a blank check




Writing Checks

never cross out or change a check never cross out or change a check once it has been writtenonce it has been writtenif you make a mistake, print VOID if you make a mistake, print VOID across the incorrect check and write across the incorrect check and write a new checka new check




Writing Checks

A A bad checkbad check is a check drawn on an is a check drawn on an account in which you have insufficient account in which you have insufficient funds. funds.

Bad Checks Bad Checks



Writing Checks

Writing a check on an account with Writing a check on an account with insufficient funds is larceny or insufficient funds is larceny or attempted larceny, unless it is attempted larceny, unless it is accidental.accidental.

Bad Checks Bad Checks



Writing Checks

A forged check is a check that is A forged check is a check that is signed by someone other than the signed by someone other than the drawer without the drawer’s authority. drawer without the drawer’s authority.

ForgeryForgery is a crime, subject to a fine is a crime, subject to a fine and imprisonment.and imprisonment.

Forged Checks Forged Checks



Writing Checks

You are guilty of a crime if you You are guilty of a crime if you knowingly offer a forged check, even if knowingly offer a forged check, even if you did not personally commit the act you did not personally commit the act of forgery. of forgery.




Writing Checks

When an offeror deliberately submits When an offeror deliberately submits a forged instrument to another, the a forged instrument to another, the resulting crime is called resulting crime is called utteringuttering..




Writing Checks

You may order your bank to stop You may order your bank to stop payment on a check that has not yet payment on a check that has not yet been paid by the bank. been paid by the bank.

Stopping Payment of a Check Stopping Payment of a Check



Writing Checks

However, if the check is given in However, if the check is given in payment of an amount actually owed, payment of an amount actually owed, you still owe the amount of the debt.you still owe the amount of the debt.

Stopping Payment of a Check Stopping Payment of a Check



Writing Checks

Fill in the blanks in the statements below.

1.1. A _____ check is one that is A _____ check is one that is signed by someone other than the signed by someone other than the drawer without the drawer’s drawer without the drawer’s authority.authority.



Writing Checks

ANSWERANSWER

Forged



Writing Checks

2.2. A _____ check is one that is more A _____ check is one that is more than six months old.than six months old.



Writing Checks

ANSWERANSWER

Stale



Writing Checks

3.3. A _____ check is one that is drawn A _____ check is one that is drawn on an account in which there is on an account in which there is insufficient funds.insufficient funds.



Writing Checks

ANSWERANSWER

Bad



Writing Checks

ANSWERANSWER

4.4. A _____ check is one that has A _____ check is one that has been written but not yet returned to been written but not yet returned to the bank for payment.the bank for payment.



Writing Checks

ANSWERANSWER

outstanding



Writing Checks

Reviewing What You Learned

1. How is a checking account opened?

Section 24.1 Assessment



Writing Checks


By depositing money in the bank and signing a signature card.


Answer



Writing Checks


2. Describe the proper way to write a check.




Writing Checks


When handwriting a check, place the figures very close to the dollar sign and keep all figures close together. Always start at the extreme left when writing amounts of money in words.


Answer



Writing Checks


Draw a line in any part of the space not needed for the amount. This prevents someone from putting in words and figures to alter the value of the check.


Answer



Writing Checks


Write the name of the payee close to the words “Pay to the order of” and fill in all unused space with a line. Make a note of the reason for the check.


Answer



Writing Checks


Sign your name so that it looks as much as possible like the one on the bank signature card.


Answer



Writing Checks


Never sign a blank a check. Never cross out or change a check once it has been written.


Answer



Writing Checks


3. Summarize the process of balancing your checkbook.




Writing Checks


Compare the check register balance with the bank statement balance to be sure they agree. When balancing the account, it is necessary to take into consideration outstanding checks.


Answer



Writing Checks


Critical Thinking ActivityBanking Fees Why do you think banks charge a fee to process an order to stop payment?



Writing Checks


Critical Thinking Activity AnswerBanking Fees Answers may vary but should recognize that the bank is charging for the time that its employees spend processing the order.



Writing Checks


Legal Skills in ActionCalculating Costs You deposit a $100 check from your friend Ted into your checking account and then write a $46.18 check to pay for groceries.



Writing Checks


Legal Skills in ActionCalculating Costs Four days later, you receive a notice from the bank that Ted’s check was bad and your account was debited $25 for the unpaid deposit.



Writing Checks


Legal Skills in ActionCalculating Costs Because the funds from your deposit did not become available, your check was returned to the grocer unpaid. Your account is debited another $25 for the unpaid check.



Writing Checks


Legal Skills in ActionCalculating Costs The next day you receive notice from your grocer that you must pay a fee of $25 for the returned check and replace it with a bank check or money order. You pay 75 cents for the money order.



Writing Checks


Legal Skills in ActionCalculating Costs Calculate how much you really spent to purchase $46.18 worth of groceries.



Writing Checks


Legal Skills in Action AnswerCalculating Costs $121.93. Original check amount, $46.18. Bank fees, $50. Grocer’s returned check fee, $25. Cost of money order, .75.

Checking Accounts Checking Accounts End of Section 24.1End of Section 24.1

Checking Accounts Section 24.1. Understanding Business and Personal Law Checking Accounts Section...

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