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Essential Standard 4.00

Essential Standard 4.00. Understand the role of finance in business. Objective 4.02. Understand the banking system. Topics. Classification of financial institutions Common payment services Federal Reserve System. Classification of financial institutions.

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Essential Standard 4.00

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  1. Essential Standard 4.00 Understand the role of finance in business

  2. Objective 4.02 Understand the banking system.

  3. Topics • Classification of financial institutions • Common payment services • Federal Reserve System

  4. Classification of financial institutions

  5. Classification of Financial Institutions • What is a depository financial institution? • What are some types of depository financial institution?

  6. Classification of Financial Institutions continued • What is a non-depository financial institution? • What are some types of non-depository financial institution?

  7. Classification of Financial Institutions continued • Which characteristics of financial institutions are used for comparing them? • What kinds of questions may be asked about each characteristic?

  8. Common payment services

  9. Common payment services • What are the first two steps in opening a checking account? • What is an endorsement? • What are the three types of endorsements?

  10. Blank Endorsement • What is a blank endorsement? • Who may cash a check that has a blank endorsement?

  11. Special/Full Endorsement • What is a special or full endorsement? • Why would this be used? • Who is the payee on this example check?

  12. Restrictive Endorsement • What is a restrictive endorsement? • Why would this be the safest endorsement? • When should it be used?

  13. Check Writing Procedures • Ensure all information is written in the check register first, and ensure checks are written in numerical order. • Write the date the check is written. • Write the payee’s name.

  14. Check Writing Procedures continued • Write in the numerical amount of the check. • Write in the amount of the check in words. • Write in the purpose of the check. • Sign the check.

  15. Bank Reconciliation • What is a bank reconciliation? • What is an outstanding check?

  16. Steps in a Bank Reconciliation • Obtain the monthly bank statement. • Determine checks paid. • Find differences between the monthly bank statement and monthly check register. • Calculate the adjusted balance. • If the balances do not agree, check the steps again and recalculate.

  17. The Federal Reserve System

  18. The Federal Reserve System Some basics about The Federal Reserve: • What is the Federal Reserve System? • Why does it exist? • Who participates? • How is it organized?

  19. The Federal Reserve System continued Services provided by the Fed: • Supervision of banks • Participation of open market activities • Acting as a clearinghouse • Holding reserves • Approving bank mergers • Supplying paper currency • Managing the discount rate

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