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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 because it allows for transactions such as cheques, standing orders, direct debits, and bank charges. These features indicate that the account is designed for regular use rather than for savings.
Step 2
Explain why ‘DR’ appears in the Balance column on the 5 May 2017 and 8 May 2017.
Answer
The ‘DR’ notation appears because Margaret's account is overdrawn on these dates. Specifically, on the 5 May 2017, the overdraft indicates that she is allowed to spend more than what is in her account, as she has prior permission from the bank.
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 was processed for €136.00, where Margaret authorized a payment to Energia for her services. In contrast, the transaction on 17 May 2017 was a standing order payment of €66.00 to Vodafone, where she had set up a regular payment to be made on a fixed date each month for her mobile service.
Step 4
Explain ‘Paypath’. State two advantages of ‘Paypath’ to Margaret.
Answer
Paypath is a payroll service that enables Margaret's employer to transfer her wages directly into her bank account.
Advantages:
- Immediate access to her wages, which she can view online or through an ATM.
- It is a secure method that maintains confidentiality about her earnings.
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 - allowing her to access her funds.
- Check account balance - enabling her to verify her available funds without visiting the bank.
Step 8
Calculate her closing bank balance after taking both of the above items into consideration.
Answer
To calculate the closing bank balance:
- Start with the balance from the bank statement: €351.00.
- Subtract the cheque amount not yet processed: €400.00.
- Add the credit transfer received: €50.00.
Calculation:
Closing Balance = €351.00 - €400.00 + €50.00 = €1.00