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This is a Banking Question - Junior Cycle Business Studies - Question 5 - 2017
Question 5
This is a Banking Question. Answer all parts of this question: Margaret Power has an account with AIB, Tuam, Co. Galway. She received the following Bank Statement... show full transcript
Worked Solution & Example Answer:This is a Banking Question - Junior Cycle Business Studies - Question 5 - 2017
Step 1
Is Margaret’s bank account a deposit or current account? Give one reason for your answer.
Answer
Margaret’s account is a current account. This is because it allows for overdrafts, which is a feature that permits the account holder to withdraw more money than what is available in their account, indicating it is not merely a deposit account.
Step 2
Explain why ‘DR’ appears in the Balance column on the 5 May 2017 and 8 May 2017.
Answer
'DR' appears in the Balance column because it indicates that the account is overdrawn. This means that Margaret does not have sufficient funds in her account and has received permission from the bank to take out amounts exceeding her balance.
Step 3
Explain the difference between the transactions that occurred on the 8 May 2017 and 17 May 2017.
Answer
On 8 May 2017, a direct debit for €136 was deducted from Margaret's account for utility payments, reflecting an agreed amount that varies by month. In contrast, on 17 May 2017, a standing order for €66 to Vodafone was executed, which is a fixed amount paid regularly, illustrating a scheduled outflow.
Step 4
Explain ‘Paypath’. State two advantages of ‘Paypath’ to Margaret.
Answer
'Paypath' is a method used by Margaret’s employer to electronically transfer her salary directly into her bank account.
Advantages:
- Immediate access to her salary, allowing her to make payments or withdrawals without delay.
- It maintains privacy and security compared to receiving cash payments.
Step 5
Step 6
Step 7
What do the initials ‘ATM’ stand for? Explain two services that are available to Margaret through the ATM.
Answer
The initials 'ATM' stand for Automated Teller Machine. Services available to Margaret through the ATM include:
- Withdraw cash: Allows her to take out cash directly without needing to enter the bank.
- Check account balance: She can view her available balance without having to visit a bank branch.
Step 8
Calculate her closing bank balance after taking both of the above items into consideration. Show your workings.
Answer
Starting with the balance as per the Bank Statement on 31 May 2017: €351.00.
Account for the unpresented cheque of €400:
- Initial Balance: €351.00
- Subtract the unpresented cheque: €351.00 - €400.00 = -€49.00
Next, account for the credit transfer of €50:
- Adding the £50 credit transfer: -€49.00 + €50.00 = €1.00
Closing Balance: €1.00