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This is an Analysed Cash Book and Personal Banking question - Junior Cycle Business Studies - Question 5 - 2018
Question 5
This is an Analysed Cash Book and Personal Banking question. Answer all parts of this question: Michael O’Connor uses an analysed cash book to keep a record of his... show full transcript
Worked Solution & Example Answer:This is an Analysed Cash Book and Personal Banking question - Junior Cycle Business Studies - Question 5 - 2018
Step 1
Prepare the analysed cash book of Michael O’Connor for the month of May 2018
Answer
Analysed Cash Book for May 2018
Debit (Receipts) Side
| Date | Details | Cash (€) | Wages (€) | Other (€) |
|---|---|---|---|---|
| 1 May 2018 | Opening cash balance | 1160 | ||
| 7 May 2018 | Received fortnightly wages | 780 | ||
| 21 May 2018 | Received fortnightly wages | 780 | ||
| 30 May 2018 | Lotto win | 25 |
Total Debit Side: €2745
Credit (Payments) Side
| Date | Details | Cash (€) | Groceries (€) | Light and Heat (€) | Rent (€) | Other (€) |
|---|---|---|---|---|---|---|
| 5 May 2018 | Paid for groceries | 280 | 280 | |||
| 11 May 2018 | Paid electricity bill | 125 | 125 | |||
| 12 May 2018 | Paid entertainment | 70 | 70 | |||
| 15 May 2018 | Paid monthly rent bill | 440 | 440 | |||
| 16 May 2018 | Paid for groceries | 290 | 290 | |||
| 18 May 2018 | Paid gas bill | 70 | 70 | |||
| 23 May 2018 | Paid monthly gym bill | 55 | 55 | |||
| 25 May 2018 | Paid phone bill | 100 | 100 | |||
| 29 May 2018 | Paid for groceries | 320 | 320 |
Total Credit Side: €2745
Closing Balance
| Date | Balance c/d | Cash (€) |
|---|---|---|
| 31 May 2018 | Balance c/d | 0 |
Step 2
State three requirements that must be satisfied when opening a bank account
Answer
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Proof of Address: A document such as a utility bill or a statement from Revenue Commissioners.
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Proof of Identity: This could be a document like a passport or driving license.
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Personal Public Service Number (PPSN): This is required if the account is to earn interest.
Step 3
Outline two differences between a current account and a deposit account
Answer
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Overdraft Facility: A current account usually has an overdraft facility, whereas a deposit account does not.
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Purpose: A current account is designed for daily transactions, while a deposit account is used primarily for saving money.
Step 4
State and explain how Michael’s education grant would transfer into his bank account
Answer
Michael's education grant would typically be transferred via a Credit Transfer. This is when the grant is sent directly into his bank account electronically by the education authority responsible for disbursing the funds.
Step 5
Explain one different method Michael might use to pay each of these bills using his new bank account
Answer
Methods for Paying Bills
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Monthly Rent: A Standing Order can be set up to automatically transfer a fixed amount directly from Michael's account to his landlord on a specified date each month.
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Groceries: Michael might use Electronic Funds Transfer (EFT), which allows him to pay bills directly from his bank account without needing a check.
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Electricity: He could use a Direct Debit arrangement, which grants permission to the electricity provider to withdraw varying amounts from his account on a regular basis, based on his usage.