What is a Bank Statement?
A bank statement is an official summary of financial transactions occurring within a given period on a bank account held by a person or business. It is typically issued periodically by the bank, such as monthly or quarterly, and includes a thorough list of deposits, withdrawals, transfers, and other transactions that have taken place over the time to which the statement pertains. The statement concludes with an account balance that reflects the known funds available as of the date of the statement.
Examples
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Monthly Bank Statement:
- John Doe receives a bank statement at the end of each month. It details all the transactions in his checking account, including direct deposits from his employer, ATM withdrawals, point-of-sale purchases, and automatic bill payments.
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Quarterly Bank Statement for Business:
- ABC Enterprises Inc. receives a quarterly bank statement summarizing three months of activity for their business account. This includes received payments from clients, payroll disbursements, vendor payments, and bank fees.
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Immediate Bank Statement via ATM:
- Jane Smith accesses her latest bank statement at an ATM machine to verify her account balance and recent transactions before making a large purchase.
Frequently Asked Questions (FAQs)
Q1: How often are bank statements issued?
- A1: The frequency of bank statement issuance varies based on the bank’s policies and the customer’s preference. Common intervals include monthly, quarterly, or bi-annually.
Q2: Can I receive electronic bank statements instead of paper ones?
- A2: Yes, many banks offer the option to receive e-statements, which are electronic versions of traditional paper statements. These are usually available via the bank’s online banking portal.
Q3: What should I do if I spot an error on my bank statement?
- A3: If you notice any discrepancies or unauthorized transactions on your bank statement, contact your bank immediately to report the error and initiate an investigation.
Q4: How long should I keep my bank statements?
- A4: It is commonly advised to keep bank statements for at least one year. However, for tax purposes or if involved in any legal matters, you might need to keep them longer—up to seven years.
Q5: What information is typically included in a bank statement?
- A5: A bank statement typically includes the account holder’s information, the statement period, a summary of the opening and closing balance, and details of all transactions (deposits, withdrawals, transfers, interest, fees, etc.) that occurred during the period.
Related Terms and Definitions
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Transaction:
- A transaction refers to any exchange or transfer of funds between accounts. Transactions can include deposits, withdrawals, payments, transfers, etc.
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Account Balance:
- The account balance is the amount of money available in a bank account at any given point in time, reflecting all credits and debits.
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Credit Entry:
- A credit entry in a bank statement represents deposits into the bank account, such as cash deposits, direct deposits from employers, or transferred funds.
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Debit Entry:
- A debit entry in a bank statement indicates withdrawals from or payments made out of the bank account, including cash withdrawals, checks written, or electronic bill payments.
Online References to Resources
- Investopedia: What is a Bank Statement?
- Bankrate: How to Read a Bank Statement
- Chase: Understanding Your Bank Statement
Suggested Books for Further Studies
- Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports by Thomas Ittelson
- The Basics of Financial Management by John Lindeman
- How to Read a Financial Report: Wringing Vital Signs Out of the Numbers by John A. Tracy
Accounting Basics: Bank Statement Fundamentals Quiz
Thank you for exploring the intricacies of bank statements with us! Keep striving to enhance your financial acumen and achieve financial success.