Chapter 4
Checking Accounts
Student Performance Objectives
Section I Understanding and Using Checking Accounts
4-1 Opening a Checking Account and Understanding How the Various Forms Are Used
Section II Bank Statement Reconciliation
4-6 Understanding the Bank Statement
Chapter Notes, Teaching Tips and Lecture Launchers
• For students who are already very familiar with maintaining and reconciling a checking
account, point out that the Chapter Summary Chart is a very visual “quick review” of the
important points of the chapter.
• The Collaborative Learning Activity for this chapter, “Choosing a Checking Account,”
provides students with a good opportunity to investigate local financial institutions and the
various checking accounts and services they offer.
may wish to use these slides as you discuss definitions, concepts, and solutions.
Section I Understanding and Using Checking Accounts
• Lecture Launcher: Discuss the importance of writing checks and maintaining accurate records
of deposits and expenditures. Ask students how many of them have their own checking
accounts. In my classes, I find that many have had little or no experience with a bank.
• Point out that, if several checks arrive at the bank on the same day, the bank will clear the
largest check first, rather than the smaller ones, possibly resulting in numerous bounced check
fees that could add up to hundreds of dollars if one is not careful. Billions of dollars are made
off this practice by banks every year. And that’s not including the fees charged by merchants
who received the bounced checks. Millions more are made by banks charging the accounts of
those who receive NSF checks.
• Spotlight: Be sure students know that when writing the “numeric” portion of a check, the
dollar sign should be as close to the first digit as possible to keep someone from adding an
• Spotlight: Be sure students understand the dangers involved in using the “blank”
endorsement. Once that check is signed in blank, it becomes bearer paper, meaning that
anyone who has it in his or her possession can cash it, even if they just found or stole it.
• Discuss debit cards; and how they are similar and different from checks.
Section II Bank Statement Reconciliation.
• Have students keep in mind that when a bank statement arrives, the balance on that statement
will not agree with the checkbook balance until the account has been reconciled. Be sure they
in the account.
• Spotlight: I find that students often forget which balance, the checkbook or the bank, gets
adjusted for various situations. One way to remember is to ask “Who didn’t know?”
• For example, the bank “didn’t know” about outstanding checks and deposits in transit,
• Spotlight: Students often aren’t sure whether to add or subtract an item. Suggest that they
think of it in terms of their own money. Ask “Would this increase or decrease the amount of
money I have?”
• Collaborative Learning Activity: Ask students to break into groups to list the types of service
charges and credits that banks may include on checking account statements. Some typical
answers may include:
• per check or monthly service charges
• Collaborative Learning Activities – Ask students to research and report on any or all of the
following:
• “Smart Cards”
• “Bounce–Proof” checking
• Spotlight: Point out that it is a good practice when reviewing canceled checks to separate
checks written for tax deductible items such as charitable contributions, child care, medical
expenses, business expenses, property taxes. This will help with income tax preparation at the
Questions Students Always Ask
“Why do I need a checking account?”
• While it is possible to live a perfectly satisfactory life without a checking account, life is
“What should I write in the memo line of a check?”
• Write whatever you want. Mostly, the memo line is used to remind ourselves why we
“In what order should I fill out the check stub?
• In chronological order. Write the transactions in as they occur. For example, if you write
check number 1233 in the amount of $200, write that in on the stub for check number 1233.
“My bank statement reconciliation doesn’t balance, and I don’t know where I made the mistake.”
• To narrow down the error, try finding the difference between the adjusted checkbook
on the wrong side.
“Why not just add the outstanding checks and subtract the deposits in transit from the checkbook
register so that it equals the amount in the bank statement?”
• It may be tempting to do that, as it would be easier. However, then you wouldn’t know