Checks
Checks in economics refer to a method of payment that involves a written order from an account holder to their bank to pay a specified sum to a recipient. This form of payment is widely used for transactions such as bill payments, business expenses, and personal purchases. Checks provide a convenient and secure way to transfer funds without the need for physical cash.
3 Key excerpts on "Checks"
eBook - ePubContemporary Economics
An Applications Approach
- Robert Carbaugh(Author)
- 2016(Publication Date)
- Routledge(Publisher)
...We must look elsewhere to see what backs our money supply. Recall that the major components of our money supply—paper currency and checking deposits—are promises to pay, or debts. Paper currency is the circulating debt of the Federal Reserve System, and checking deposits represent the debt of depository institutions. These items have no intrinsic value. A $20 bill is simply a piece of paper; a checking account is an accounting entry; and a 25-cent piece has less value as metal than its face value. What underlies the value of a $10 bill or a $500 balance in a checking account? Currency and checking accounts are considered money because we widely accept them in return for goods and services. We accept money in exchange because we are confident that others will be willing to accept our money when we spend it. Put simply, money is anything that we generally accept as a medium of exchange. The law reinforces our confidence in the acceptability of currency. All U.S. currency, including paper money and coins, is designated as legal tender —that is, the federal government mandates its acceptance in transactions and requires that dollars be used in the payment of taxes. However, this does not mean that a particular type of currency must always be accepted. For example, a convenience store may legally refuse to accept bills in denominations of more than $20, or an automobile dealer may refuse to be paid only in pennies. Although the legal tender pledge reinforces the general acceptability of currency, it does not apply to other types of money. For example, the government does not mandate that Checks be legal tender. Nevertheless, checking accounts are an important component of the basic money supply. Although Checks are a generally accepted medium of exchange, we may legally turn them down as payments for goods and services...
eBook - ePubPreventing and Detecting Employee Theft and Embezzlement
A Practical Guide
- Stephen Pedneault(Author)
- 2010(Publication Date)
- Wiley(Publisher)
...Each physical check traveled to the vendor, then to the vendor’s bank, next to the Federal Reserve Bank, and finally back to the business’s bank before being returned to the originating business. Mailing Checks created a “float” on the company’s funds between the time the Checks were mailed and when they were received by the vendor, deposited, and cleared the banking system. The float period could extend from several days to weeks. Once the Checks cleared, the actual canceled Checks were returned to the business along with the monthly bank statement. As computers filtered into most businesses, so did electronic accounting software packages. Automated accounting procedures were implemented, and many businesses switched to printing Checks through their accounting systems. Today some businesses never print and write a single check; they pay all their obligations electronically, as will be discussed. Besides deposits and Checks, the other transactions common to most businesses were bank transfers between accounts. Traditionally the only means to accomplish a transfer was to write a check from one account and deposit it into the other. With the advent of phone banking, someone authorized on the account could check balances within accounts as well as transfer funds simply by providing verbal instructions by phone to the bank. Today transfers can be accomplished electronically by many means, and in some cases, without approval for each and every transfer, as will be discussed. The interesting thing about all the banking changes and advances in technology is that many small businesses continue to run their business and complete their banking requirements just as they always have, by writing Checks and physically taking their deposits to a teller at a local branch. Their bookkeeping systems continue to be as manual today as they were years ago. Check Processing and Clearing Changes New means of banking have been developed that have made their way into many businesses...
eBook - ePubPrinciples of Political Economy
Abridged with Critical, Bibliographical, and Explanatory Notes, and a Sketch of the History of Political Economy
- John Stuart Mill, J. Laurence (James Laurence) Laughlin, (Authors)
- 2009(Publication Date)
- Perlego(Publisher)
...A bank, instead of lending its notes to a merchant or dealer, might open an account with him, and credit the account with the sum it had agreed to advance, on an understanding that he should not draw out that sum in any other mode than by drawing Checks against it in favor of those to whom he had occasion to make payments. These Checks might possibly even pass from hand to hand like bank-notes; more commonly, however, the receiver would pay them into the hands of his own banker, and when he wanted the money would draw a fresh check against it; and hence an objector may urge that as the original check would very soon be presented for payment, when it must be paid either in notes or in coin, notes or coin to an equal amount must be provided as the ultimate means of liquidation. It is not so, however. The person to whom the check is transferred may perhaps deal with the same banker, and the check may return to the very bank on which it was drawn. [pg 341] This is very often the case in country districts; if so, no payment will be called for, but a simple transfer in the banker's books will settle the transaction. If the check is paid into a different bank, it will not be presented for payment, but liquidated by set-off against other Checks; and, in a state of circumstances favorable to a general extension of banking credits, a banker who has granted more credit, and has therefore more Checks drawn on him, will also have more Checks on other bankers paid to him, and will only have to provide notes or cash for the payment of balances; for which purpose the ordinary reserve of prudent bankers, one third of their liabilities, will abundantly suffice. § 5...
