1. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 1 17-1 17-1Banks and Other Financial Institutions 17-2 17-2Financial Services and Electronic Banking 17-3 17-3Checks and Payment Methods 17 C H A P T E R Banking and Financial Services

2. © 2012 Cengage Learning. All Rights Reserved. SLIDE 2 17-1 Banks and Other Financial Institutions Goal 1Explain the purpose of the Federal Reserve System. Goal 2List the types of financial institutions. Goal 3Discuss factors for selecting a financial institution.

3. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 3 KEY TERMS ●Federal Reserve System (Fed) ●commercial bank ●credit union ●Federal Deposit Insurance Corporation (FDIC)

4. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 4 THE BANKING SYSTEM ●The Federal Reserve System (Fed) ●Federal Reserve activities ●Banking and the economy

5. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 5 Checkpoint ●What is the main purpose of the Federal Reserve System? ● The Federal Reserve System was created by the federal government to supervise and regulate member banks and to help banks serve the public efficiently by holding reserves and clearing checks.

6. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 6 TYPES OF FINANCIAL INSTITUTIONS ●Deposit institutions ●Non-deposit financial institutions

7. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 7 DEPOSIT INSTITUTIONS ●Commercial banks ●Savings and loan associations ●Mutual savings banks ●Credit unions

8. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 8 NON-DEPOSIT FINANCIAL INSTITUTIONS ●Life insurance companies ●Investment companies ●Consumer finance companies ●Mortgage companies ●Check-cashing outlets ●Pawnshops

9. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 9 Checkpoint ●What are some examples of non-deposit financial institutions? ●Examples of non-deposit financial institutions include life insurance companies, investment companies, consumer finance companies, mortgage companies, check-cashing outlets, and pawnshops.

10. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 10 SELECTING A FINANCIAL INSTITUTION ●Services offered ●Savings accounts ●Checking and payment accounts ●Loans and other credit plans ●Other services, such as safe-deposit boxes ●Safety ●Convenience ●Fees and charges ●Restrictions

11. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 11 Checkpoint ●What factors should be considered when selecting a financial institution? ●Factors to consider when shopping for a financial institution include the services offered, safety, convenience, fees and charges, and restrictions.

12. © 2012 Cengage Learning. All Rights Reserved. SLIDE 12 17-2 Financial Services and Electronic Banking Goal 1Identify the financial services used by consumers. Goal 2Explain types of checking accounts. Goal 3Describe electronic banking activities.

13. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 13 KEY TERMS ●safe-deposit box ●service charge ●debit card

14. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 14 TYPES OF FINANCIAL SERVICES ●Savings services ●Payment services ●Lending services ●Electronic banking ●Storage of valuables ●Investment advice ●Management of trusts

15. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 15 Checkpoint ●What are the main financial services used by consumers? ●The main financial services used by consumers are savings services, payment services, lending services, electronic banking, storage of valuables, investment advice, and management of trusts.

16. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 16 TYPES OF CHECKING ACCOUNTS ●Regular checking accounts ●Interest-earning ●Checking accounts ●Special checking accounts

17. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 17 COMPARING CHECKING ACCOUNTS ●Minimum balance ●Interest rate earned, if any ●Monthly service charge ●Fees for other services, such as printing checks and stop payment orders ●Other restrictions

18. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 18 Checkpoint ●What are three main types of checking accounts? ●Regular checking accounts ●Interest-earning checking accounts ●Special checking accounts

19. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 19 ELECTRONIC BANKING ●E-banking services ●Automatic teller machines ●Payments at the point-of-sale ●Direct deposit ●Automatic bill payments

20. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 20 EXAMPLES OF ELECTRONIC BANKING ACTIVITIES ATMPRE- AUTHORIZED ONLINEPOINT-OF- SALE Check account balances Withdraw cash Made deposits Transfer funds View account history Pay bills Apply for loans Manage investments Accept direct deposits Pay bills automatically Make debit card purchases

21. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 21 ELECTRONIC PAYMENT OPTIONS ●Debit card transactions ●Online payments ●Stored-value cards ●Smart cards

22. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 22 BANKING IN THE FUTURE ●Financial services combined with wireless technology ●Personalized systems for obtaining, transferring, and using funds

23. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 23 Checkpoint ●What are common electronic banking services? ●Common electronic banking services include automatic teller machines (ATMs), point-of-sale payments, direct deposit, and automatic bill payments. ●E-banking also includes electronic payment options such as debit card transactions, online payments, stored-value cards, and smart cards.

24. © 2012 Cengage Learning. All Rights Reserved. SLIDE 24 17-3 Checks and Payment Methods Goal 1Describe three main types of endorsements. Goal 2Describe proper check-writing procedures. Goal 3Explain the bank reconciliation process. Goal 4Identify other payment methods.

25. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 25 KEY TERMS ●endorsement ●check register ●stop payment order ●bank statement ●bank reconciliation ●outstanding checks

26. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 26 OPENING A CHECKING ACCOUNT ●Benefits of checking accounts ●Convenience and ease of making payments ●Safety to make payments with less risk than using cash ●Proof of payment ●A record of finances for managing your money

27. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 27 THE FIRST DEPOSIT ●Signature card ●Joint account ●Deposit slip

28. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 28 TYPES OF ENDORSEMENTS ●Blank endorsement ●Full endorsement ●Restrictive endorsement ●Special endorsement ●Two signatures required ●Restrictive endorsement

29. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 29 SAMPLE ENDORSEMENTS

30. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 30 Checkpoint ●What are the three types of endorsements? ●Blank endorsement ●Full endorsement ●Restrictive endorsement

31. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 31 USING A CHECKING ACCOUNT ●Check-writing procedures ●Elements of a check ●The check register ●Writing a check ●Proper check writing ●Stopping payment

32. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 32 PARTS OF A CHECK

33. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 33 Checkpoint ●What is the purpose of a check register? ●The purpose of a check register is to record all account activities so that the account holder will always know the account balance. ●The check register is also used for reconciling a checkbook with a bank’s monthly statement.

34. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 34 THE RECONCILIATION PROCESS ●Bank statement information ●Determine checks paid ●Find differences ●Calculate adjusted balance

35. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 35 MONTHLY ACCOUNT STATEMENT

36. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 36 RECONCILIATION FORM

37. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 37 Checkpoint ●What are causes of differences between the bank statement balance and a check register? ●Checks that have not cleared ●Deposits mailed to the bank that may not have arrived by the time the statement was issued ●Transactions that may not have been recorded in the check register ●Transactions that were not recorded correctly ●Service charges or interest earned

38. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 38 OTHER TYPES OF PAYMENTS ●Certified checks ●Cashier’s checks ●Traveler’s checks ●Money orders

39. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 39 CERTIFIED CHECKS ●Personal check for which a bank has guaranteed payment ●Certification stamped on face ●Signed or initialed by a bank officer

40. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 40 CASHIER’S CHECKS ●Check that a bank draws on its own funds ●Costs the amount of the check plus a service fee ●More acceptable than the personal checks

41. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 41 TRAVELER’S CHECKS ●Special forms designed for making payments when away from home ●Require your signature in two places ●Cash a check or pay for a purchase ●Commonly accepted throughout the world

42. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 42 MONEY ORDERS ●Form of payment that orders the issuing agency to pay the amount printed on the form to another party ●A bank money order ●A postal money order ●An express money order ●A telegraphic money order

43. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 43 Checkpoint ●How does a certified check differ from a cashier’s check? ●A certified check is a personal check for which a bank has guaranteed payment. ●A cashier’s check is a check that a bank draws on its own funds.