This is the actual amount that the employee receives before statutory deductions are made. For example, a salesman receives $500.00 per week flat pay and five per cent on his total sales which amount to $1000.00. His gross pay would be $500.00 plus $50. His total gross pay is now $550 per week. To calculate the net pay, the clerk must deduct the following: tax, NIS, Housing Trust.
This is the amount the worker receives after deductions have been made.
TYPES OF CHEQUES
Basically there are two types of cheques – open and crossed. In addition, the crossed cheque can be divided into two categories – those with general crossings and those with specific crossings. The figure below illustrates this classification:
An open cheque does not have two parallel lines and can be cashed at the bank by the payee once he endorses it (signs his name on the reverse side). If the payee wishes to transfer the cheque to someone else, he can do so by endorsing it and writing a note on the back authorising the bank to pay that person. This type of cheque is not very secure because if it is lost or stolen, anyone may be able to cash it if he can persuade the bank that he is the payee.
When a cheque is crossed, two parallel lines are drawn across the cheque. In addition ‘& Co.’ maybe written between the lines. A crossed cheque cannot be cashed but must be deposited into an account. It is much safer than an open cheque.
CROSSED CHEQUE – A/C PAYEE ONLY
This type of cheque is even safer than a general crossed cheque because it is not transferable. It must be deposited into the account of the payee, and not in anyone else’s account.
CROSSED CHEQUE – SPECIFIC CROSSING
This specially-crossed cheque not only states that it must be paid into the account of the payee, but also gives the name of the bank at which the cheque must be deposited.
A cheque is said to have been dishonoured when the bank has, for some reason or other, refused to pay on presentation. The reasons for refusal may be attributed to one of the following causes:
· Words and figures differ
· There are insufficient funds
· Irregular endorsement, i.e., the name on the reverse of a cheque does not correspond with the payee’s name on the front
· Drawer’s signature differs from that in the bank’s records
· An alteration which requires signing
· The cheque may be out-of-date (stale)
· The cheque is post-dated.
A post-dated cheque is one which is dated ahead of the current date. A bank does not credit the customer’s account with the amount of a post-dated cheque until the due date.
A certified cheque is one which is issued by the bank upon the request of the customer. The person receiving a certified cheque is guaranteed payment upon presenting it at a bank.
THE BANK STATEMENT
At regular intervals, or on request, the bank will send to a customer a bank statement which provides a record of all transactions that have taken place between the customer’s account and the bank. Amounts which reduce the balance in the account are shown in the payment column, and amounts, which increase the balance, are shown in the receipts column. As each payment or receipts is recorded, a new balance figure is shown in a third column.
In addition to bank account services and the cheque facilities, banks offer a wide range of services that are used by businesses., for example:
· Standing order – the customer authorises the bank to transfer a certain sum of money to another account at regular intervals.
· Credit transfer – a debtor utilises this service when he wishes to pay a number of suppliers. He prepares one cheque with a list of names of suppliers and the bank sends the amount owed to each.
· Credit card – this service enables the customer to purchase goods and services without the use of cash.