Detailed Notes: 3.
1 Receiving and Payment of Banking
Money
Introduction
Effective management of receipts and payments is critical in banking. It ensures transaction
accuracy, meets legal and regulatory requirements, and supports organizational financial health.
A. Receiving of Banking Money
1. Cash Deposits
o Physical cash deposited via tellers, ATMs, or cash deposit machines.
2. Cheque Deposits
o Cheques deposited by customers.
o Funds credited post-clearance and verification.
3. Electronic Transfers
o Direct Deposits: Commonly used for payroll, credited directly by employers.
o EFT: Transfers between accounts within or across banks.
4. Mobile Banking Methods
o Mobile Wallets: e.g., Google Pay, Paytm – receive funds into linked bank
accounts.
o P2P Transfers: Real-time transfer between individuals using mobile apps.
5. International Transactions
o Inward Remittances: Funds received from abroad via SWIFT, PayPal, Western
Union, etc.
B. Payment of Banking Money
1. Withdrawals
o ATM Withdrawals: 24/7 access to cash.
o Over-the-Counter: Withdrawal via teller at the bank.
2. Electronic Payments
o Online Bill Payments: Utility, insurance, loan EMI payments, etc.
o EFT: Sending money to other accounts (NEFT, RTGS, IMPS).
3. Payments via Card & Apps
o POS Payments: Using debit cards at stores.
o Mobile Payment Apps: Payments made through apps for shopping,
subscriptions, etc.
4. International Payments
o Outward Remittances: Sending funds abroad for personal or business reasons.
C. Key Considerations
Clearance and Settlement
o Ensures transaction validity and prevents fraud.
o Particularly important for cheques and EFTs.
Transaction Fees
o Varies by mode and amount of transaction.
o Can impact customer choice of payment method.
Regulatory Compliance
o AML (Anti-Money Laundering) procedures.
o Adherence to national and international banking norms.
o KYC (Know Your Customer) requirements.
3.2. Receipts and Payments on Cash Basis
Slide 2: Definition
Cash Basis Accounting: Records transactions only when cash is received or paid.
Ignores the timing of when income is earned or expenses incurred.
Slide 3: Key Concepts
Receipts
Income is recorded when cash is received.
Example: Sale recorded when payment is received.
Payments
Expenses are recorded when cash is paid.
Example: Supplies paid in cash are recorded at time of payment.
Slide 4: Comparison with Accrual Basis
Aspect Cash Basis Accrual Basis
Revenue Recognition When cash is received When earned
Expense Recognition When cash is paid When incurred
Complexity Simple More complex
Slide 5: Preparation of Receipts and Payments Account
1. Title the account correctly.
2. Record opening cash/bank balances on the left.
3. Summarize all receipts under their respective heads.
4. Summarize all payments under their respective heads.
5. Calculate totals for both sides.
6. Deduct payments from receipts to get the closing balance.
Slide 6: Specimen Format
Receipts and Payments Account for the Year Ended 31 Dec 2017
Receipts Amount ($) Payments Amount ($)
Opening Balance XXXX Library Books 1210.00
Subscriptions 1350.00 Rent for Library Hall 240.00
Donations 2600.00 Office Expenses 35.00
Entrance Fees 480.00 Postage & Stationery 72.00
Locker Rent 785.00 Furniture Purchased 934.00
Investment 1100.00
Total Receipts XXXX Total Payments XXXX
Closing Balance XXXX
Slide 7: Example Solution
Receipts
Subscription: $1350
Donations: $2600
Entrance Fees: $480
Locker Rent: $785
Investment: $1100
Total = $6315
Payments
Library Books: $1210
Rent: $240
Office Expenses: $35
Postage & Stationery: $72
Furniture: $934
Total = $2491
Closing Balance = $6315 - $2491 = $3824
