An order cheque is only for the person named on the cheque, meaning no one else can cash it. For example, if Arjun writes a cheque to Varun, Varun must go personally to encash the amount.
A stale cheque is one that is more than 3 months old and is usually not honoured by banks.
Tangible assets are physical resources that have an actual presence and can be touched or felt, such as land, buildings, machinery, and cash.
Banks primarily raise money by charging interest on loans, which is the extra amount paid back by borrowers in addition to the principal amount borrowed.
An asset is a valuable resource owned or controlled by an individual, corporation, or nation, aimed at yielding future advantages and serving as a potential source of cash flow, cost reduction, or sales enhancement.
Net interest margin is the difference between the interest rate a bank charges on loans and the interest rate they pay on deposits, which is crucial for a bank's profitability.
A crossed cheque cannot be cashed over the counter; instead, the money is transferred directly to the payee’s account. It is marked by drawing two lines on the top left corner of the cheque.
An Account payee cheque ensures that the money is directly transferred to the payee’s account, typically marked with 'A/C PAYEE'.
A traveller’s cheque can be used by travellers abroad where the local currency is not accepted and can be exchanged for local currency at banks or exchange offices.
A Debit Card is a type of payment card issued by banks that allows cardholders to access their money directly from their current or savings accounts, with transactions immediately deducted from the account.
A depreciation schedule is a table that tracks how much an asset decreases in value over time, listing details such as purchase date, cost, expected lifespan, and annual tax deductions.
Straight-line depreciation is a method of allocating the cost of an asset evenly over its useful life, calculated using the formula: Depreciation expense = (Cost of asset - Residual value) / (Useful life).
The formula is: Depreciation expense = (Cost of asset - Residual value) / (Useful life), where cost is the initial asset cost, residual value is its estimated end value, and useful life is the number of years it will be used.
The Double Declining Balance Method is a depreciation method that depreciates an asset at a faster rate than the straight-line method by applying a fixed percentage (twice the straight-line rate) to the book value of the asset.
Banks profit from the interest rate spread by lending at higher rates than they pay for deposits. The difference between the interest earned on loans and the interest paid on deposits is the bank’s profit.
A post-dated cheque is one that is dated for a future date and can only be cashed after that date.
An ante-dated cheque is one that is dated before the current date, and some banks may not accept ante-dated cheques.
Depreciation is the decrease in value of an asset over time due to wear and tear, obsolescence, or other factors. It reflects the reduction in an asset’s value on the balance sheet.
A fixed deposit account, also known as a term deposit, allows individuals to deposit a lump sum of money for a fixed period at a predetermined interest rate, with penalties for early withdrawal.
A recurring deposit account allows individuals to save a fixed amount of money regularly over a specified period, earning interest on the deposits, with the accumulated amount paid out at the end of the tenure.
Businesses typically use a current account for frequent transactions because it allows for unlimited transactions and facilitates easy withdrawals and deposits.
The drawer is the person who writes the cheque and has the account from which the money is drawn.
UPI allows transactions up to 1 Lakh INR, but for educational and medical expenses, one can transact up to 5 Lakh INR.
Depreciation is a method used by businesses to spread out the cost of an expensive purchase over time, allowing for better financial management by planning annual write-offs.
Interest Rate Spread is the difference between the interest rate a bank pays on deposits and the interest rate they charge other customers for loans, allowing banks to make a profit.
Bank transfer refers to any transfer of money that involves the usage of bank accounts, typically requiring the account details of the sender and receiver.
Cons of using a digital wallet include limited acceptance at some locations, reliance on internet connectivity or Bluetooth, and vulnerability to cyber frauds and hacking.
The Unified Payments Interface (UPI) is a digital payment system that facilitates instant money transfers between bank accounts through mobile devices, enhancing the convenience of financial transactions.
A cheque is a written order directing a bank to pay a specific amount of money from the drawer's account to the payee.
A 'crossed cheque' is primarily used for transferring funds directly to the payee’s account.
Money transfer systems refer to the various methods available for sending money from one person or entity to another, including physical, electronic, and digital means.
A self-cheque is written by the account holder to themselves, which they can cash at their bank.
The Imperial Bank of India was formed in 1921 by merging three presidency banks and became the cornerstone of the Indian banking industry, later nationalized to become the State Bank of India in 1947.
A current account is designed for frequent transactions, typically used by businesses and organizations, allowing for unlimited deposits and withdrawals but usually not offering interest on the balance.
Banks are financial institutions that accept deposits, lend money, and facilitate transactions for individuals and businesses.
The Banking Regulation Act is a law in India that regulates and supervises banks, empowering the Reserve Bank of India to ensure compliance and financial stability.
The validity period of a cheque from the date it’s written is typically 3 months.
A Bearer cheque can be cashed by anyone holding it without needing any identification.
UPI transactions are secured through two-factor authentication, ensuring that the transfer of funds is safe.
A crossed cheque is primarily used for transferring funds directly to the payee’s account. It cannot be encashed directly at the counter but must be deposited into a bank account.
The main difference is that a Debit Card is linked directly to the cardholder's bank account, allowing spending only what is available, while a Credit Card allows borrowing up to a limit that must be repaid.
The net interest margin is the difference between the interest rate a bank earns on loans and other interest-earning assets and the interest rate it pays on deposits and other interest-bearing liabilities.
The Units of Production method calculates depreciation based on how much an asset has been used and how many units a particular machinery has produced for a business.
The Annuity Method calculates depreciation on the asset by considering its rate of return, treating the asset as an investment and factoring in the internal rate of returns on cash outflows and inflows.
Interest rates are the extra money paid by borrowers to banks for loans, or the money earned by depositors for keeping their money in a bank.
Joint accounts are bank accounts shared by two or more individuals, commonly used by spouses, family members, or business partners for shared financial management.
The State Bank of India traces its origins back to 1806 with the establishment of the Bank of Calcutta, later known as the Bank of Bengal, and has played a significant role in India's banking history.
An account payee cheque is made by crossing the cheque and writing 'A/C PAYEE' on it. This restricts the cheque to be deposited directly into the payee’s bank account.
A depreciation schedule outlines the annual depreciation expenses for assets. It helps track the reduction in asset value over time, which is important for financial reporting and tax purposes.
Pros of using a digital wallet include protection of sensitive information from theft, convenience of not carrying physical wallets and cards, and the potential to improve financial services in underdeveloped areas.
IFSC (Indian Financial System Code) is a unique 11-digit alphanumeric code used to identify specific bank branches in India.
UPI, or Unified Payments Interface, is a payment system launched in India that allows users to link their bank accounts to a mobile app for instant money transfers between bank accounts.
A cheque is a document issued by banks that can be used to pay for things or transfer money from one's bank account to someone else's, requiring the receiver’s name, amount, date, and signature.
Loans involve borrowing money from a bank that must be repaid with interest, while deposits are funds placed in a bank for safekeeping or earning interest.
A bearer cheque allows anyone holding it to get the cash from the bank without needing any identification. The drawer should strike out the 'OR ORDER' option on the cheque to make it a bearer cheque.
Digital wallets are used for making online transactions and storing digital information such as payment card details, shipping addresses, and loyalty program information. They can be classified as hot or cold wallets.
Intangible assets are non-physical resources that hold long-term value for a company and are used over time to generate revenue, such as patents and trademarks.
A digital wallet is a financial application that allows users to make transactions and store payment information securely on their smartphones or computers, utilizing encryption technology to protect sensitive information.
Banks primarily play a role in facilitating financial transactions. They provide services such as accepting deposits, lending money, and enabling payments, which are essential for the functioning of the economy.
A loan is a sum of money an individual or a business may borrow from a bank, which must be repaid with interest over a specified period, typically used to finance specific purchases or projects.
Tangible assets are physical items like machinery and buildings, while intangible assets include non-physical items like intellectual property and software, both of which can be depreciated or amortized respectively.
Interest rates affect the amount of interest earned on deposits and the cost of interest paid on loans, influencing financial decisions for both parties.
The payee is the person or entity to whom the funds are to be paid.
A chequebook is a small booklet containing pre-printed cheques linked to a bank account, each uniquely numbered and including spaces for the recipient's name, amount, and signature.
A savings account is a basic account offered by banks that allows individuals to deposit money, earn interest on the balance, and withdraw funds as needed, primarily used for saving money and conducting day-to-day transactions.
Machinery is an example of a tangible asset, as it is a physical asset that can be touched or seen.
A blank cheque is a risky type of cheque where only the drawer’s signature is filled in, and the rest of the details are left empty. It should never be used.
The Banking Regulation Act of 1949 is a law that supervises and controls banks in India. It sets out regulations for the establishment, management, and operation of banks in the country.
A deposit is money placed by individuals or businesses with a bank for safekeeping or to earn interest, serving as an important source of funding for banks.
Credit scores are important for accessing credit and financial products, influenced by various factors that determine an individual's creditworthiness.
A cheque that is more than 3 months old is referred to as a 'Stale cheque'.
A Self cheque is written by the account holder to themselves.
Common risks include data breaches, cyberattacks like phishing, transaction errors, privacy concerns, dependency on technology, and limited consumer protection against fraud.
Debit cards are linked to a savings or current account and allow the cardholder to make transactions using the funds available in the account. They are widely used for ATM withdrawals.
A Credit Card is a payment card issued by banks that allows cardholders to borrow money to make purchases up to a pre-approved limit, which must be repaid within a certain time frame.
The Indian banking system consists of commercial banks, small finance banks, and cooperative banks.
Common types of bank accounts include savings accounts, current accounts, and fixed deposit accounts, each with unique features and benefits.
The interest on a savings account is calculated as a reward for storing money in the bank. It is usually calculated as a percentage of the average daily balance in the account.
UPI is a digital payment method that allows users to make direct bank-to-bank transfers using their smartphones without the need to preload funds into a separate account.
Digital wallets, also known as e-wallets or virtual wallets, require users to preload money into the wallet, which can then be used for transactions.
Banks contribute to fraud prevention in digital transactions through educating customers about secure transaction practices.
A self cheque is written by the account holder to themselves. It is used when the account holder wants to withdraw money from their own account.
The Straight-Line Method involves dividing the cost of the asset evenly over its useful life. It is a simple and commonly used method for calculating depreciation.
A bank passbook is a small log that keeps track of all the money in an account and all transactions made, showing details such as deposits, withdrawals, interest earned, and balance.
A cheque is considered an 'account payee cheque' when it is crossed and 'A/C PAYEE' is written on it.
Digital wallets are used for making online transactions and storing digital information.
Two-factor authentication adds an extra layer of security to online banking and payment apps.
A credit score is a numerical representation of an individual's creditworthiness based on their credit history. In India, credit scores are provided by credit bureaus such as CIBIL and range from 300 to 900.
The interest rate a bank charges on loans is influenced by the demand for borrowing and the amount of money the bank has available to lend.
Digital Wallets, also known as e-wallets, are virtual wallets that store payment information for online transactions, allowing users to make purchases or transfer money easily.
A HUF account is a bank account held in the name of a Hindu Undivided Family, allowing for financial transactions on behalf of the family and used for investment and savings purposes.
A joint account is a bank account held by two or more individuals, where all account holders have equal access to the account and can conduct transactions.
UPI enhances convenience by allowing users to transfer money instantly with just a smartphone or tablet, requiring only the recipient's UPI ID or a QR code for transactions.
A credit card allows the holder to borrow funds for purchases, which need to be repaid later, often with interest. In contrast, a debit card is linked directly to a bank account, and purchases are deducted directly from the account balance.
UPI enables users to make various bill payments directly from their bank accounts, including electricity, phone, and gas bills.
Common financial frauds include phishing, identity theft, and mortgage fraud, with strategies available to protect against these scams.
The cheque number is used to find the status of a cheque and is typically found in the first six numbers at the bottom of the cheque.
Public Wi-Fi networks are not secure, making them vulnerable to cyber fraud and security breaches.
ATMs, or automated teller machines, are small bank interfaces that allow a person to perform banking tasks like withdrawing cash, checking account balance, and sometimes depositing money without going into a bank branch.
Cash transfer refers to the straightforward process of physically handing over cash from one entity to another, often convenient for small transactions.
UPI (Unified Payments Interface) is known for facilitating bank-to-bank transfers using mobile devices. It enables users to instantly transfer funds between bank accounts using a smartphone.
A blank cheque is one that has only a signature but no other details filled in, posing risks as it can be misused.
A bearer cheque can be cashed by anyone holding it without needing any identification. It is a type of cheque where the payee’s name is not specified.
Always create strong and unique passwords for online banking and payment apps.
A cheque that is more than 3 months old is considered a stale cheque. Banks may refuse to honour stale cheques due to the risk of them being presented after a long period.
Rewards credit cards offer rewards points for every transaction, which can be redeemed for gifts, vouchers, or cashback.
Credit cards allow cardholders to borrow money from the card issuer (typically, a bank) up to a certain credit limit to make purchases. The cardholder is required to repay the borrowed amount along with interest if the balance is not paid in full by the due date.
Prepaid cards are loaded with a specific amount of money by the cardholder and can be used for transactions until the loaded amount is exhausted. They are not linked to a bank account and do not require a credit check.
Charge cards are similar to credit cards but require the cardholder to pay the full balance each month. They do not have a preset spending limit but may have an 'unlimited' limit based on the cardholder's creditworthiness.
