CHAPTER
17
SLIDE 1
CHAPTER
17
Banking and
Financial Services
17-1 Banks and Other Financial
Institutions
17-2 Financial Services and
Electronic Banking
17-3 Checks and Payment Methods
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
17-1
Banks and Other
Financial Institutions
Goal 1 Explain the purpose of the Federal
Reserve System.
Goal 2 List the types of financial
institutions.
Goal 3 Discuss factors for selecting a
financial institution.
© 2012 Cengage Learning. All Rights Reserved.
SLIDE 2
CHAPTER
17
SLIDE 3
KEY TERMS
● Federal Reserve System (Fed)
● commercial bank
● credit union
● Federal Deposit Insurance Corporation
(FDIC)
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Principles of Business, 8e
CHAPTER
17
SLIDE 4
THE BANKING SYSTEM
● The Federal Reserve System (Fed)
● Federal Reserve activities
● Banking and the economy
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Principles of Business, 8e
CHAPTER
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.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
TYPES OF FINANCIAL
INSTITUTIONS
17
SLIDE 6
● Deposit institutions
● Non-deposit financial institutions
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Principles of Business, 8e
CHAPTER
17
SLIDE 7
DEPOSIT INSTITUTIONS
● Commercial banks
● Savings and loan associations
● Mutual savings banks
● Credit unions
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Principles of Business, 8e
CHAPTER
NON-DEPOSIT FINANCIAL
INSTITUTIONS
17
SLIDE 8
● Life insurance companies
● Investment companies
● Consumer finance companies
● Mortgage companies
● Check-cashing outlets
● Pawnshops
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Principles of Business, 8e
CHAPTER
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.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
SELECTING A
FINANCIAL INSTITUTION
17
SLIDE 10
● 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
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
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.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
17-2
Financial Services and
Electronic Banking
Goal 1 Identify the financial services used
by consumers.
Goal 2 Explain types of checking accounts.
Goal 3 Describe electronic banking
activities.
© 2012 Cengage Learning. All Rights Reserved.
SLIDE 12
CHAPTER
17
SLIDE 13
KEY TERMS
● safe-deposit box
● service charge
● debit card
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
TYPES OF FINANCIAL
SERVICES
●
●
●
●
●
●
●
17
SLIDE 14
Savings services
Payment services
Lending services
Electronic banking
Storage of valuables
Investment advice
Management of trusts
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
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.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
TYPES OF CHECKING
ACCOUNTS
17
SLIDE 16
● Regular checking accounts
● Interest-earning
● Checking accounts
● Special checking accounts
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Principles of Business, 8e
CHAPTER
COMPARING CHECKING
ACCOUNTS
17
SLIDE 17
● Minimum balance
● Interest rate earned, if any
● Monthly service charge
● Fees for other services, such as printing
checks and stop payment orders
● Other restrictions
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
17
SLIDE 18
Checkpoint 
● What are three main types of checking
accounts?
● Regular checking accounts
● Interest-earning checking accounts
● Special checking accounts
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
17
SLIDE 19
ELECTRONIC BANKING
● E-banking services
● Automatic teller machines
● Payments at the point-of-sale
● Direct deposit
● Automatic bill payments
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
EXAMPLES OF ELECTRONIC
BANKING ACTIVITIES
ATM
Check account balances

Withdraw cash

Made deposits

Transfer funds

PREAUTHORIZED
17
SLIDE 20
ONLINE
POINT-OFSALE


View account history

Pay bills

Apply for loans

Manage investments

Accept direct deposits

Pay bills automatically

Make debit card purchases
© 2012 Cengage Learning. All Rights Reserved.



Principles of Business, 8e
CHAPTER
ELECTRONIC
PAYMENT OPTIONS
17
SLIDE 21
● Debit card transactions
● Online payments
● Stored-value cards
● Smart cards
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
17
SLIDE 22
BANKING IN THE FUTURE
● Financial services combined with wireless
technology
● Personalized systems for obtaining,
transferring, and using funds
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
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.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
17-3 Checks and
Payment Methods
Goal 1
Describe three main types of
endorsements.
Goal 2
Describe proper check-writing procedures.
Goal 3
Explain the bank reconciliation process.
Goal 4
Identify other payment methods.
© 2012 Cengage Learning. All Rights Reserved.
SLIDE 24
CHAPTER
17
SLIDE 25
KEY TERMS
● endorsement
● check register
● stop payment order
● bank statement
● bank reconciliation
● outstanding checks
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
OPENING A
CHECKING ACCOUNT
17
SLIDE 26
● 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
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
17
SLIDE 27
THE FIRST DEPOSIT
● Signature card
● Joint account
● Deposit slip
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Principles of Business, 8e
CHAPTER
17
SLIDE 28
TYPES OF ENDORSEMENTS
● Blank endorsement
● Full endorsement
● Restrictive endorsement
● Special endorsement
● Two signatures required
● Restrictive endorsement
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
17
SLIDE 29
SAMPLE ENDORSEMENTS
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
Checkpoint 
17
SLIDE 30
● What are the three types of
endorsements?
● Blank endorsement
● Full endorsement
● Restrictive endorsement
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
USING A
CHECKING ACCOUNT
17
SLIDE 31
● Check-writing procedures
● Elements of a check
● The check register
● Writing a check
● Proper check writing
● Stopping payment
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
17
SLIDE 32
PARTS OF A CHECK
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
Checkpoint 
17
SLIDE 33
● 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.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
THE RECONCILIATION
PROCESS
17
SLIDE 34
● Bank statement information
● Determine checks paid
● Find differences
● Calculate adjusted balance
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
MONTHLY ACCOUNT
STATEMENT
© 2012 Cengage Learning. All Rights Reserved.
17
SLIDE 35
Principles of Business, 8e
CHAPTER
17
SLIDE 36
RECONCILIATION FORM
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
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
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
OTHER TYPES OF
PAYMENTS
17
SLIDE 38
● Certified checks
● Cashier’s checks
● Traveler’s checks
● Money orders
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
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
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
CASHIER’S CHECKS
17
SLIDE 40
● 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
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
TRAVELER’S CHECKS
17
SLIDE 41
● 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
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
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
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e
CHAPTER
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.
© 2012 Cengage Learning. All Rights Reserved.
Principles of Business, 8e