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© 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
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© 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.
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© 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)
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© 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
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© 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.
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© 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
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© 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
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© 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
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© 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.
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© 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
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© 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.
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© 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.
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© 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
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© 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
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© 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.
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© 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
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© 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
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© 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
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© 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
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© 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
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© 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
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© 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
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© 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.
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© 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.
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© 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
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© 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
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© 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
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© 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
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© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 29 SAMPLE ENDORSEMENTS
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© 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
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© 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
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© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 32 PARTS OF A CHECK
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© 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.
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© 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
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© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 35 MONTHLY ACCOUNT STATEMENT
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© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 17 SLIDE 36 RECONCILIATION FORM
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© 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
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© 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
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© 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
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© 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
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© 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
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© 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
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© 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.
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