Accountancy · Chapter 14
Study notes aligned to the official NEB syllabus.
Banking transactions refer to all receipts and payments made through a bank. A bank transaction is a record of money that has moved in and out of a bank account.
The following are the types of bank accounts in which amount can be deposited or cash transactions can be operated.
1) Current Account A current account is one in which there is no restriction in respect of the number of withdrawals and the extent of the amount to be drawn. No interest is allowed by the bank on the deposit made in a current account. The business deposits cash and cheques in its current account and withdraws amount from it as and when required.
2) Saving Account A saving account is one in which there is restriction in respect of the number of withdrawals and the extent of the amount to be drawn. A saving account is not suitable for business. It is opened by individuals. An individual prefers to open a saving account to earn moderate interest.
3) Fixed Deposit Account A fixed deposit account is one in which a large sum is deposited for a fixed period of time, say for 1 year or 2 years or more years. The account holder cannot withdraw his/her deposit before the period expires. The rate of interest is the highest in such an account.
A cheque is an important negotiable instrument which can be transferred by mere hand delivery. A written instruction to a bank or financial institution to pay a given amount from the cheque holder's account to the bearer is known as a cheque.
Features of Cheque
Parties to a Cheque