Banking and payment system – lesson 2

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Banking and payment system is key aspect of the free CONTROL ACCOUNTS, JOURNALS and the BANKING SYSTEM course.

This is lesson 2 of CONTROL ACCOUNTS, JOURNALS and the BANKING SYSTEM course and you should have read the page listed below before reading this page:

Welcome to Banking and payment system.

It is important as an Accounting Trainee or Bookkeeper that you understand the important relationship a business has with its bank. Banking in itself is a huge subject covering investments, mortgages and foreign exchange. All we can do at this stage of your studies is to provide an introduction to banking and concentrate on banking procedures.

Introduction to Banking

Having read the chapter on introduction to banking and building societies you should have a good understanding of the differences between the two, and you should be able to detail the services that they provide.

Accounting examiners will expect you to know:

-the differences between a current and a deposit account
-differences between an overdraft and a mortgage
-understand what is meant by direct debit and standing orders
-define and prepare cheques and paying-in slips
-define a bank draft
-know what is meant by BACS and CHAPS

The link to Amazon for the recommended reading on introduction to banking is:

Now lets test your knowledge of Banking and payment system – go to the test below.

QUIZ: Banking and payment system.

Before attempting this quiz you should have read chapter 1 entitled 'Banking Procedures' of your recommended textbook “Bookkeeping 2".

Please attempt all questions and then press the submit button at the end, you will then be taken to your results page.

Good luck!


An account which is used for day-to-day payments is called a ................ account

An account which pays interest and is used for savings and surplus money is called an ........................... account

A current account from which a customer may borrow from time to time is called an ....................

A long-term loan with an agreed repayment programme, used for financing a business is called a .......................

A long-term loan to finance the purchase of property is called a ........................

A written instruction to a bank by a customer (the drawer) to pay a specified amount of money to a specified person (the payee) – clearance using the 2-4-6 day cycle, is called a ......................

A card issued to a customer which can be used for purchase and cash withdrawals; payment is taken from the account within two days is called a

A card issued to a customer on a ‘buy now and pay later’ basis; payment is made on receipt of a statement

A card which can be purchased and given a ‘balance to spend’ – useful when the customer is under 18 is called a

As an accounts assistant at N Limited you have to process the documents for a wide variety of payments to employees, suppliers and for other business expenses such as one-off purchases, travel costs and bills.

What method of payment would you normally expect to use for the paying a monthly subscription to the local gym for the benefit of employees?

What do the letters BACS stand for ?

Leaderboard for -Banks, building societies and payment systems

1. Sana-33 Points
2. -33 Points
3. Teresa-33 Points
5. -33 Points

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