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BANK:-
A bank is an institution, which deals in money and credit. A bank receives
deposits, lands money, makes collections and renders many others services.
KINDS OF BANK:-
The important kinds of bank are:
Central or State Bank
Commercial bank
Exchange Banks
Industrial banks
Saving Banks
Agricultural Banks
Co-operative Banks
Investment Banks.
FUNCTIONS OF A BANK:-
Bank renders following types of functions:
PRIMARY FUNCTIONS:-
a) Banks accepts money deposits from the public.
b) Banks lend money to people and obtain interest on it.
c) Banks remit money to any part of the country and outside the country.
d) Banks collect the proceeds of the both local and outstation checks.
AGENCY SERVICES:-
Bank renders services as an agent of customers.
a) Collection of bills, salaries, pensions, dividends and promissory notes etc.
b) Banks undertake to make payments in respect of subscriptions, insurance
premium, shares and other securities.
c) Banks undertake to purchase and sell debentures, bonds, shares and other
securities.
d) A bank also acts as a trustee and administrator of immovable property.
MISCELLANEOUS SERVICES:-
a) Bank accepts jewellery, important documents and other valuables for safe
custody.
b) Banks deals in foreign exchange.
c) Bank issue commercial letters of credit for facilitating and financing foreign
trade.
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Financial accounting notes
CHECK:-
The check is the written order by which the customer (account holder)
requires to draw money from he bank. They also serve as the proof of payment. A
check is a piece of commercial paper drawn on a bank and payable on demand.
KINDS OF CHECKS:
Open check
Blank check
Bearer check
Order check
Crossed check
Past-Dated check
CHECK BOOK:-
A book containing some blank checks to a page, perforated so that they may
be removed singly. To the left of each check is a check sub. The depositor’s name and
address are printed on each check and the “MICR” numbers are shown on the bottom
edge.
DISHONOR OF CHECK:
Checks are sometimes returned unpaid for certain reasons. It is called
“dishonor of check”. Check may be dishonored because of following reasons:
a) Insufficient funds in customers account.
b) When the amounts in words and figures differ.
c) When signatures differ.
d) If payment is stopped by drawer.
e) When an out dated check is presented at the counter.
f) When the drawer becomes bankrupt; on receiving such information.
g) When crossed check is presented at the counter.
h) Notice of the drawer’s death received by the bank.
i) Alternations made in the check if not signed by the drawer.
BANK DRAFT:-
It is a check drawn by one bank on another branch of the same bank situated
at a different town payable on demand.
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Financial accounting notes
BANK CHARGES:-
The charges made by the bank for services rendered to its customers are
called “Bank Charges”, e-g bank commission or bank services fees.
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