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1.8 H) Bank Balances
1.8 H) Bank Balances
We are going to be looking at bank statements in this section. The content in this section will be useful for the exam and very useful in real life.
The amount of money in your account is known as the balance. There are two different types of transactions to do with banks statements. These are:
Let’s now have a few examples.
The amount of money in your account is known as the balance. There are two different types of transactions to do with banks statements. These are:
- Credits – money that goes into your account. Examples would be wages or salaries, gifts from friends or shop refunds. Credits increase your balance.
- Debits – money that leaves your account. Examples would be any purchases (food, clothes, computer games etc) and bills (gas, water, electric etc). Debits decrease your balance.
Let’s now have a few examples.
Example 1
I have to pay a bill that is £152.71. My bank balance before I pay the bill is £637.92. What is my bank balance after I pay the bill?
The first step in answering these types of questions is to work out the type of transaction; is the transaction a credit or a debit? The transaction in the question is a debit and this is because it is a bill. This means that the £152.71 will be leaving the individual’s account. Therefore, we work out the balance after the bill has been paid by taking £152.71 away from £637.92.
I have to pay a bill that is £152.71. My bank balance before I pay the bill is £637.92. What is my bank balance after I pay the bill?
The first step in answering these types of questions is to work out the type of transaction; is the transaction a credit or a debit? The transaction in the question is a debit and this is because it is a bill. This means that the £152.71 will be leaving the individual’s account. Therefore, we work out the balance after the bill has been paid by taking £152.71 away from £637.92.
The individual has £485.21 in their account after the bill has been paid.
Example 2
Currently I have £974.62 in my account. I then get paid a salary of £1,350. What is my bank balance after I receive my salary?
Like the previous example, the first step is to determine the type of transaction. The transaction is a credit because a salary is money that goes into your account. As the transaction is a credit, we add £1,350 onto the original bank balance (£974.62).
Currently I have £974.62 in my account. I then get paid a salary of £1,350. What is my bank balance after I receive my salary?
Like the previous example, the first step is to determine the type of transaction. The transaction is a credit because a salary is money that goes into your account. As the transaction is a credit, we add £1,350 onto the original bank balance (£974.62).
My bank balance is £2,324.62 after getting paid my salary.
Example 3
These types of questions can be made more complex by being given a table and asked to fill in the missing gaps. For example:
Fill in the missing gaps in the table below.
These types of questions can be made more complex by being given a table and asked to fill in the missing gaps. For example:
Fill in the missing gaps in the table below.
The first thing to remember with this question is that credits are added to the bank balance and debits are taken off the bank balance.
Let’s work out the balance after the gas bill. The gas bill is a debit, which means that it is money leaving the bank account. Therefore, we take £52.95 off of £846.13, which gives us £793.18 (846.13 – 52.95 = 793.18). I have added this value to the table.
Let’s work out the balance after the gas bill. The gas bill is a debit, which means that it is money leaving the bank account. Therefore, we take £52.95 off of £846.13, which gives us £793.18 (846.13 – 52.95 = 793.18). I have added this value to the table.
I am now going to work out the balance after wages. Wages are a credit, which means that it is money that goes into the bank account. Therefore, we add the wages onto the bank balance; we add £957.32 to £793.18, which is £1,750.50 (793.18 + 957.32 = 1,750.50). Also, as we are working with money, we need to make sure that we give our balance to two decimal places; it may be the case that you would have lost a mark if you wrote £1,750.5 rather than £1,750.50. I have added this value to the table.
The final value to find in the table is the balance after groceries. Groceries are debits, which means that they are money leaving the bank account. Therefore, we take £77.82 from £1750.50, which gives us £1,672.68 (1750.50 – 77.82 = 1,672.68). I have added this value to the table.
The table is now complete.
End Note
These types of questions are very straightforward providing that we remember what credits and debits mean. A credit is money that goes into your bank account (they increase your bank balance) and a debit is money that leaves your bank account (they decrease your bank balance). It is worth getting these definitions down on a revision card so that you do not forget them.
These types of questions are very straightforward providing that we remember what credits and debits mean. A credit is money that goes into your bank account (they increase your bank balance) and a debit is money that leaves your bank account (they decrease your bank balance). It is worth getting these definitions down on a revision card so that you do not forget them.