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Unformatted text preview: C HAPTER 25 B USINESS AND B ANKING Objectives After studying this chapter, you should have an understanding of: the relationship between a business and its bank the legal framework of negotiable instruments the rights and obligations of those connected with negotiable instruments the legal challenges involved in electronic banking Learning Outcomes Understand the duties of the bank to the customer (page 621) Understand the duties of the customer to the bank (page 622) Understand the bank-customer relationship (page 622) Understand the risk of the person writing a cheque (page 623) Understand the risk of the person accepting a cheque (page 625) Understand the role of the bank in cashing cheques (page 628) Recognize the risks associated with electronic banking (page 629) Compare the risks of each method of accepting payment (page 633) Chapter Summary Every business needs to use banks to deposit receipts and pay bills. Banks also offer a full range of financial services, such as cash management, investment advice, brokerage services, and business financing. The relationship between the bank and its customers is governed by the contract that identifies the rights and responsibilities of the parties. A business can accept payment from its customers in the form of cash, cheque, credit card, or debit card, or can extend credit. A business should understand the risks associated with each method of payment. A cheque is a negotiable instrument, meaning that the validity of the cheque does not depend on any circumstances outside the cheque and the bank will pay it, as long as there is enough money in the account. A certified cheque guarantees payment. A cheque that is endorsed on the back can be cashed by the person named on the back. Electronic banking is cheap and efficient but carries risks that are inherent in a paperless and instantaneous transaction, such as authentication and verification, counterfeiting and fraud. Study Outline Use this outline to prepare a complete set of notes for this chapter. The Banking Relationship page 620 _______________________________________________________________________ _______________________________________________________________________ Regulation of banks_______________________________________________________ _______________________________________________________________________ 2008 BY N ELSON , A DIVISION OF T HOMSON C ANADA L TD . PART 8: FINANCING THE BUSINESS The bank-customer agreement_______________________________________________ _______________________________________________________________________ Duties of the bank and the customer__________________________________________ _______________________________________________________________________ The bank-customer relationship______________________________________________ _______________________________________________________________________ Negotiable Instruments page 623 _______________________________________________________________________...
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