AAT Level 2 Principles of Bookkeeping Controls

Cash

• Physical Money (notes and coins)

• Everyday purchases and face-to-face payments

• No effect on bank balance

Cheque

• Written instruction to a bank to pay someone a specified amount

• Paying businesses or individuals when electronic payments aren’t used

• Approx. 3 working days to be processed

Credit Card

• Payment card that lets you borrow money from the card provider

• Shopping, online purchases and spreading costs of purchases

• Funds will be reduced from bank account at a later date, when repayment is made

Debit Card

• Payment card linked directly to a bank account

• Everyday shopping, online purchases

• Bank will debit the bank balance electronically

• Funds will be reduced immediately

Bank Draft

• A bank-issued payment guaranteed by the bank

• Large purchases e.g. cars where guaranteed funds are needed

• Funds are taken at the time a bank draft is arranged

Standing Order

• Instruction to bank to make fixed regular payments

• Rent, savings, subscriptions

• Amounts cannot be varied by the payee

• Funds are debited immediately from the bank account

Direct Debit

• Permission for a company to collect money from your account

• Utility bills, and other regular bills where amounts may vary

• Funds are debited on the date of payment

Direct Credit

• Electronic payment sent directly into a bank account

• Wages, Pensions, Benefits or supplier payments

• Funds are credited same day from the senders account

BACS

• Bankers Automated Clearing Services

• UK Electronic System

• Payroll, direct debits and direct credits

• Normally takes 3 working days to set up payment and money to clear the bank account of the payee

CHAPS

• Clearing House Automated Payment System

• Fast way to transfer money

• Urgent or high-value payments (property, business payments)

• Payment is guaranteed to arrive by CHAPS same day the transaction is arranged

Faster Payments

• Send a payment from one bank account to another (bank transfer)

• Electronic payments that can be arranged online

• Will clear the payers bank account almost immediately