Chapter 24.1

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Checking Accounts

Section 24.1

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Understanding Business and Personal Law

Checking Accounts

Section 24.1

Writing Checks

Section 24.1

Checking Accounts

Section 24.2Other Payment Methods

24Chapter Writing Checks

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Checking Accounts

Section 24.1

Writing Checks

What Youll Learn

How to describe the process of opening achecking account and some of thedepositors rights (p. 522)

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Checking Accounts

Section 24.1

Writing Checks

What Youll Learn

How to explain the proper way to write acheck and discuss problems associatedwith checking accounts (p. 524)

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

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Checking Accounts

Section 24.1

Writing Checks

Why Its Important

Knowing about checking accounts andwriting checks will help you use your moneywisely.

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Checking Accounts

Section 24.1

Writing Checks

Legal Terms

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

uttering (p. 528)

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7/58Understanding Business and Personal Law

Checking AccountsSection 24.1

Writing Checks

Using a Checking Account

Opening a Checking AccountBalancing Your CheckbookWriting Checks

Section Outline

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Writing Checks

Pre-Learning Question

How would you use a checkingaccount?

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Writing Checks

Checks are:

Using a Checking Account

the most common kind of negotiableinstrument in usea safe way to send funds through

the mailconvenient receipts for the peoplewho write them

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Writing Checks

To open a checking account, you

Opening a Checking Account

deposit money in a banksign a signature card

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Writing Checks

Then the bank agrees to pay money

out, up to the amount you havedeposited, when you write a check.


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A bank may refuse to pay a check that

is more than six months old withoutincurring liability.

Such a check is known as a stalecheck.


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Writing Checks

You should balance, or reconcile, your

bank statement as soon as possibleafter receiving it. Carefully comparethe check register balance with the

bank statement balance to make surethat they agree.

Balancing Your Checkbook

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Writing Checks

Dont forget to take into consideration

outstanding checks, or checks youhave written that have not yet beenreturned to the bank for payment.

Balancing Your Checkbook

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Writing Checks

Banks provide regular and special

printed check forms. These checksdisplay a series of numbers printed inmagnetic ink that make it possible for

computers to process the checksquickly and accurately.

Writing a Check

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Writing Checks

24.1

A Personal Check

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Writing Checks

A check is a draft drawn on a bank

and payable on demand.

Parities to a Check

Drawerperson who writes the checkDraweebank ordered to pay the

moneyPayeeperson to whom the check ismade payable

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Writing Checks

To avoid negligence, you should write

checks that cannot be changed easilyor signed by a forger.

Avoiding Negligence

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Writing Checks

print the figures very close to the

dollar signkeep all of the figures close togetheralways start at the extreme left

when writing amounts of money inwords

Steps for Writing a Check

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Writing Checks

draw a line through any extra space

that remains after youve written theamountthis prevents someone from putting

in words and figures to alter thevalue of the check


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be sure figures are the same as

written amounts (if there is adifference, the bank will honor thewritten amount)

write the name of the payee close tothe words Pay to the order of


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Writing Checks

fill in all unused space with a line

make a note of the reason for thecheck


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Writing Checks

sign your name so that it looks as

much as possible like the one onthe bank signature cardnever sign a blank check


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Writing Checks

never cross out or change a check

once it has been writtenif you make a mistake, print VOIDacross the incorrect check and write

a new check


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Writing Checks

A bad check is a check drawn on an

account in which you have insufficientfunds.

Bad Checks

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Writing Checks

Writing a check on an account with

insufficient funds is larceny orattempted larceny, unless it isaccidental.

Bad Checks

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A forged check is a check that is

signed by someone other than thedrawer without the drawers authority.

Forgery is a crime, subject to a fineand imprisonment.

Forged Checks

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Writing Checks

You are guilty of a crime if you

knowingly offer a forged check, even ifyou did not personally commit the actof forgery.

Forged Checks

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Writing Checks

When an offeror deliberately submits a

forged instrument to another, theresulting crime is called uttering.

Forged Checks

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You may order your bank to stop

payment on a check that has not yetbeen paid by the bank.

Stopping Payment of a Check

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Writing Checks

However, if the check is given in

payment of an amount actually owed,you still owe the amount of the debt.

Stopping Payment of a Check

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Fill in the blanks in the statementsbelow.

1. A _____ check is one that is

signed by someone other than thedrawer without the drawersauthority.

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Writing Checks

ANSWER

Forged

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Writing Checks

2. A _____ check is one that is morethan six months old.

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Writing Checks

ANSWER

Stale

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Writing Checks

3. A _____ check is one that is drawnon an account in which there is

insufficient funds.

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Writing Checks

ANSWER

Bad

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Writing Checks

ANSWER

4. A _____ check is one that hasbeen written but not yet returned to

the bank for payment.

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Writing Checks

ANSWER

outstanding

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Reviewing What You Learned

1. How is a checking account opened?

Section 24.1 Assessment

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Writing Checks


By depositing money in the bank andsigning a signature card.


Answer

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Writing Checks


2. Describe the proper way to write acheck.


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When handwriting a check, place thefigures very close to the dollar sign and

keep all figures close together. Always startat the extreme left when writing amounts ofmoney in words.


Answer

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Draw a line in any part of the space notneeded for the amount. This prevents

someone from putting in words and figuresto alter the value of the check.


Answer

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Write the name of the payee close to thewords Pay to the order of and fill in all

unused space with a line. Make a note ofthe reason for the check.


Answer

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Writing Checks


Sign your name so that it looks as much aspossible like the one on the bank signature

card.


Answer

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Writing Checks


Never sign a blank a check. Never crossout or change a check once it has been

written.


Answer

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Writing Checks


3. Summarize the process of balancingyour checkbook.


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Writing Checks


Compare the check register balance withthe bank statement balance to be sure they

agree. When balancing the account, it isnecessary to take into considerationoutstanding checks.


Answer

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Writing Checks


Critical Thinking Activity

Banking FeesWhy do you think banks charge a fee toprocess an order to stop payment?

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Critical Thinking Activity Answer

Banking FeesAnswers may vary but should recognizethat the bank is charging for the time thatits employees spend processing the order.

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Legal Skills in Action

Calculating CostsYou deposit a $100 check from your friendTed into your checking account and thenwrite a $46.18 check to pay for groceries.

C

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Writing Checks



Calculating CostsFour days later, you receive a notice fromthe bank that Teds check was bad andyour account was debited $25 for theunpaid deposit.

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Calculating CostsBecause the funds from your deposit didnot become available, your check wasreturned to the grocer unpaid. Your accountis debited another $25 for the unpaidcheck.

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Writing Checks



Calculating CostsThe next day you receive notice from yourgrocer that you must pay a fee of $25 forthe returned check and replace it with abank check or money order. You pay 75cents for the money order.

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Calculating CostsCalculate how much you really spent topurchase $46.18 worth of groceries.

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Legal Skills in Action Answer

Calculating Costs$121.93.Original check amount, $46.18.Bank fees, $50.Grocers returned check fee, $25.Cost of money order, .75.

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Checking AccountsEnd of Section 24.1

Documents

Chapter 24.1