Definition
A Bank Giro Credit (BGC) is a preprinted paper slip used to facilitate the payment of cash or cheques into a specified bank account. Often provided by banks to their customers, BGCs are typically found at the back of chequebooks or at the bottom of utility and credit card bills. They allow the payer to make payments into another account, often their own. It is important to note that a completed BGC itself is not a payment instrument and carries no value other than as a vehicle for the cash or cheques that accompany it.
Examples
Example 1: Utility Bill Payment
John receives his monthly utility bill, which includes a preprinted BGC at the bottom. John fills in his details and the payment amount on the BGC and accompanies it with a cheque for the bill amount. He submits it at his local bank branch, which then processes the payment into the utility company’s bank account.
Example 2: Personal Chequebook Usage
Sarah has a chequebook from her bank, and each page includes a BGC at the back. She fills out the BGC when she needs to deposit a cheque she received from her friend into her own bank account. She goes to her bank, and the teller processes the cheque using the BGC.
Frequently Asked Questions
What happens to my Bank Giro Credit slip after submission?
When you submit a BGC with cash or a cheque at a bank, the bank processes the accompanying payment and the BGC, which is then used to ensure the payment is routed to the correct account as specified.
Can a BGC be used without cash or a cheque?
No, a BGC is not of any value without the cash or cheque accompanying it. It acts merely as a tool to facilitate the deposit.
Where can I typically find BGC slips?
BGC slips are commonly found in the back of chequebooks and on utility and credit card bills provided by various service providers.
- Credit Transfer: A direct bank transfer from one account to another.
- Giro: A system of direct debit from bank accounts to pay bills.
- Cheque: A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer.
Online References
Suggested Books for Further Studies
- “Accounting All-in-One For Dummies” by Kenneth W. Boyd
- “Principles of Accounting” by Belverd E. Needles, Marian Powers, and Susan V. Crosson
- “Financial Accounting: Tools for Business Decision Making” by Paul D. Kimmel, Jerry J. Weygandt, and Donald E. Kieso
Accounting Basics: “Bank Giro Credit” Fundamentals Quiz
### What is the primary purpose of a Bank Giro Credit slip?
- [x] To facilitate the payment of cash or cheques into a specified bank account.
- [ ] To transfer funds directly between bank accounts.
- [ ] To act as a direct debit instrument.
- [ ] To serve as a standalone payment method.
> **Explanation:** A Bank Giro Credit slip is designed to facilitate the payment of cash or cheques into a specified bank account, not to stand alone as a payment method.
### Can a completed BGC be used independently as a payment instrument?
- [ ] Yes, it can be used independently.
- [x] No, it requires accompanying cash or cheque.
- [ ] Yes, but only for small amounts.
- [ ] No, only if pre-approved by the bank.
> **Explanation:** A completed BGC is not itself a payment instrument and carries no value apart from the cash or cheques that accompany it.
### Where would you commonly find BGC slips?
- [x] At the back of chequebooks and on utility bills.
- [ ] Only in bank branches.
- [ ] On credit cards.
- [ ] Inside transaction receipts.
> **Explanation:** BGC slips are commonly found at the back of chequebooks and at the bottom of utility and credit card bills.
### Is a BGC the same as a credit transfer?
- [ ] Yes.
- [x] No.
- [ ] Only if used for the same amount.
- [ ] In some banks, they are considered the same.
> **Explanation:** A BGC is not the same as a credit transfer. A credit transfer is a direct bank transfer, while a BGC facilitates deposits of cheques or cash.
### What type of transactions can be executed using a BGC?
- [x] Payment of cash or cheques into a specified bank account.
- [ ] Direct debit authorizations.
- [ ] Standalone payments for purchases.
- [ ] Bank account withdrawals.
> **Explanation:** BGCs are used for depositing cash or cheques into a specified bank account.
### Can BGCs be used for online banking transactions?
- [ ] Yes, they are a core part of online banking.
- [x] No, BGCs are typically used for physical transactions.
- [ ] Sometimes, depending on the bank.
- [ ] Only for international money transfers.
> **Explanation:** BGCs are primarily used for physical transactions involving cash or cheques, not for online banking.
### What does BGC stand for?
- [x] Bank Giro Credit.
- [ ] Bank General Credit.
- [ ] Borrowed Giro Credit.
- [ ] Business Giro Credit.
> **Explanation:** BGC stands for Bank Giro Credit.
### Why might a business prefer to use BGC slips for utility payments?
- [x] Because they provide a straightforward way to document and verify payments.
- [ ] Because they are faster than electronic transfers.
- [ ] Because they are cheaper than cheques.
- [ ] Because they provide immediate fund availability.
> **Explanation:** BGC slips help in document verification and serve as a structured way to handle payments.
### Do BGCs have any intrinsic monetary value?
- [ ] Yes, they are as valuable as cheques.
- [x] No, they only have value when accompanied by cash or cheques.
- [ ] Yes, but only when issued by banks.
- [ ] No, unless they are used by a registered business.
> **Explanation:** BGCs themselves have no intrinsic monetary value and are only useful when accompanied by cash or cheques.
### What should accompany a BGC slip for it to be processed?
- [x] Cash or cheques.
- [ ] Only a signature.
- [ ] A bank manager's approval.
- [ ] An accompanying credit card.
> **Explanation:** BGC slips need to be accompanied by cash or cheques to be processed as a complete transaction.
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