Banking Company Accounts in Corporate Accounting .pptx

A bank account is essential for every business organization. It helps in efficient money management, financial control, and smooth operations.

In corporate accounting, a bank account is a formal record of financial transactions with a bank, acting as an asset for the company. It is a financial arrangement for a business to deposit, withdraw, and manage its funds, used for daily operations like paying vendors, saving for future purchases, or investing surplus capital.

1. Bank Account

2. A bank account is an arrangement between a bank and a customer under which the customer deposits money, and the bank keeps it safely and allows the customer to withdraw or use it whenever required. It serves as a record of all financial transactions (deposits, withdrawals, transfers, interest, etc.) between the customer and the bank. Meaning: In corporate accounting , a bank account represents the company’s financial relationship with its banker . It is an account maintained by the company in a bank to record all cash and banking transactions — such as deposits, withdrawals, cheque payments, receipts, and transfers. It forms part of the company’s Cash and Bank balances under Current Assets in the Balance Sheet. In the books of a company, the Bank Account shows the amount of money held in the bank at any given time.   Definitions: 1. According to R. N. Anthony: “A bank account is a record maintained by a business enterprise of its transactions with the bank, showing deposits, withdrawals, and the current balance.”

3. A bank account is essential for every business organization. It helps in efficient money management, financial control, and smooth operations. Benefit to Corporate Company Explanation 1. Safe Custody of Funds The company’s money is safely deposited with the bank instead of being held in cash, reducing risk of theft or misuse. 2. Easy Payments and Collections Enables companies to make payments to suppliers and receive money from customers conveniently through cheques, NEFT, RTGS, etc. 3. Accurate Record Keeping All bank transactions are recorded systematically in the company’s books, ensuring proper accounting. 4. Helps in Bank Reconciliation The bank account allows the company to prepare a Bank Reconciliation Statement (BRS) and verify the accuracy of cash and bank balances. 5. Source of Finance By maintaining a good banking relationship, companies can obtain loans, overdrafts, and other credit facilities. 6. Proof of Transactions The bank statement acts as documentary evidence of all financial transactions. 7. Facilitates Online and International Transactions Corporates can easily handle payments to employees, suppliers, and clients globally using bank accounts.

4. Benefit Explanation 1. Source of Deposits The company’s deposits increase the bank’s funds, which can be used for lending and investment. 2. Revenue Generation Banks earn income through service charges, interest, and commissions on corporate transactions. 3. Business Relationship Corporate accounts create long-term relationships and potential for offering more services (loans, credit cards, forex, etc.). 4. Liquidity Management Corporate deposits help banks maintain liquidity and meet statutory requirements like CRR and SLR. 5. Enhanced Reputation Having large corporates as clients improves a bank’s market image and credibility. B. Benefits to the Bank A company’s bank account also benefits the bank , as it helps generate business and strengthen financial stability .

5. Statutory Liquidity Ratio (SLR) 18% (as of May 2025) Banks must hold liquid assets like cash, gold, or government-approved securities equal to 18% of their Net Demand and Time Liabilities (NDTL).   Cash Reserve Ratio (CRR) 4 % (as of March 2025); Proposed reduction to 3% by November 2025 Banks must hold cash with the RBI equal to the CRR percentage of their NDTL. Rebate on Bills Discounted/ Unexpired Discount Rebate on bills discounted is the interest received in advance and represents unearned discounts for those bills which will mature after the close of the financial year.

6.   Schedule Year ended as on 31.3…(current year) Year ended as on 31.3...(Previous year) Income Interest earned Other income Total II.Expenditure Interest expended Operating expenses Provisions and contingencies Total III.Profit /Loss Net profit/loss (-) for the year Profit/Loss (-) brought forward Total IV. Appropriations Transfer to statutory reserves Transfer to other reserves Transfer to Government / Proposed dividends Balance carried over to balance sheet   Total   13 14     15 16                                                       ________________                                       ___________ Form B FORM OF PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 st MARCH(000s omitted )