Tag: introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

Questions Related to introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

State the following statement is True or False
In fixed deposit account, the bank provides interest at fixed rate.

maths banking and taxation types of accounts banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

  1. True

  2. False

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Correct Option: B
Explanation:

In fixed deposit account, the bank provides an interest rate which varies between 4 and 7.25 percent.

The withdrawal of amount from bank account is known as.

maths banking and taxation types of accounts banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

  1. Debit

  2. Saving

  3. Credit

  4. None of these

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Correct Option: A
Explanation:

If we withdraw some amount from bank account the expense is known as debit.

Hence, the option A is correct.

The minimum amount required to open a savings bank account is ____

maths banking and taxation types of accounts banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

  1. Rs. $500$

  2. Rs. $1000$

  3. Rs. $2000$

  4. Rs. $3000$

Show answer
Correct Option: A
Explanation:

In India, where most people are able to save lesser amount of money every month, none of them wants to get penalised for not maintaining a defined amount of minimum balance in his/her account by their respective banks. 

People prefer to have low or no restrictions on them, be it financial or any other. 
Most banks ask account holders to retain a certain amount of money in their account. 
If people fail to maintain this minimum balance, some fine is imposed on them and the bank deducts that amount from their account.
The minimum amount required to open a savings bank account is Rs. $500$

Banks do not pay any interest on __________accounts. Rather, banks impose service charges for running these accounts.

maths banking and taxation types of accounts banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

  1. Current Account Deposits or Demand Deposits

  2. Savings deposits

  3. Fixed deposits

  4. Demand Loans

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Correct Option: A
Explanation:

Banks do not pay any interest on Current Account Deposits or Demand deposits accounts. Rather, banks impose service charges for running these accounts.

Bank pass book is also known as _____________.

maths banking and taxation types of accounts banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

  1. Bank book

  2. Bank account

  3. Bank column

  4. Bank statement

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Correct Option: D

The given table shows the bank transaction of Ram.

Month June July August
Deposit (Rs.)Withdrawal(Rs.) 2x - y + zx-y - z x + by + 3zx- by + 3z x + 4z2x - 3z

His balance for the month of September is

maths banking and taxation types of accounts banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

  1. $2(3y + 4z)$

  2. $3(4y + 3z)$

  3. $2(3x + by)$

  4. $8x + zz$

Show answer
Correct Option: B
Explanation:

$ Ram's\quad total\quad deposit\quad in\quad 3\quad months\quad is-\ (2x-y+z)+(x+6y+3z)+(x+4z)\ =4x+5y+8z----(a)\ His\quad total\quad withdrawal\quad is-\ (x-y-z)+(x-6y+3z)+2x-3z\ =4x-7y-z----(b)\ \therefore \quad His\quad balance\quad is\quad a-b\ \quad \quad =12y+9z\ \quad \quad =3(4y+3z)\ \ \  $

Ajit opens a bank account by depositing Rs $20,000$. At the end of each year, he withdraws a sum of money that makes the balance exactly half of what it was in the beginning of the year. If the bank pays $10\%$ interest, what is the total amount withdrawn by Ajit at the end of three years?

maths banking and taxation types of accounts banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

  1. Rs $17,856$

  2. Rs $20,377$

  3. Rs $18,330$

  4. Rs $19,400$

Show answer
Correct Option: B
Explanation:

$Depositing\quad amount=Rs20000,\ Amount\quad after\quad 1\quad year=1.1*20000=Rs22000,\ Amount\quad withdrawn=amount\quad left=0.5*22000=Rs11000\ Amount\quad after\quad 2\quad year=1.1*11000=Rs12100,\ Amount\quad withdrawn=amount\quad left=0.5*12100=Rs6050\ Amount\quad after\quad 3\quad year=1.1*6050=Rs6655,\ Amount\quad withdrawn=amount\quad left=0.5*6655=Rs3327.5\ Total\quad amount\quad withdrawn=Rs3327.5+6050+11000=Rs20377.5 $

A man saves $Rs.200$ in each of the first three months of his service. In each of the subsequent months his saving increases by $Rs.40$ more than the saving of immediately previous month. After how many months his total savings from the start of service will be $Rs.11040$. 

maths banking and taxation types of accounts banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

  1. $18$ months

  2. $19$ months

  3. $20$ months

  4. $21$ months

Show answer
Correct Option: D
Explanation:

Savings are:

$200,200,200,240,280,.......\text{up to n terms}$

But $200,240,280,......(n-2)$ terms forms an A.P

Since, sum of n terms of an AP $=S _n=\dfrac n2[2a+(n-1)d]$, where first term is $a$ and common difference $d$

$\therefore $ According to question

$400+\dfrac {n-2}{2}[2(200)+(n-2-1)40]=11040$  ...... Sum $=11040$

$\Rightarrow 400+(n-2)[200+(n-3)20]=11040$

$\Rightarrow (n-2)[200+20n-60]=10640$

$\Rightarrow (n-2)(20n+140)=10640$

$\Rightarrow 20(n+7)(n-2)=10640$

$\Rightarrow n^2+5n-14=532$

$\Rightarrow n^2+5n-546=0$

$\Rightarrow (n+26)(n-21)=0$

$\Rightarrow n=21$

So, total time $=21$ months.

The profit on interest charged on the hire purchase should appear in the profit and loss account in what manner?

maths banking and taxation types of accounts banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

  1. The total interest levied should be divided equally over the total period the for purchase agreement

  2. The interest charged in that period only should be included

  3. Final instalment is paid

  4. Interest should be apportioned in proportion to the repayment totals

Show answer
Correct Option: B
Explanation:

The profit on interest charged on the hire purchase should appear in the profit and loss account. when the interest charged in that period only should be included.

The deposit is fixed and is repayable only after a specific period is over is called

maths banking and taxation types of accounts banks introduction, recurring deposit accounts and calculation of interest on a fixed deposit account

  1. current account

  2. fixed deposit account

  3. recurring deposit account

  4. savings account

Show answer
Correct Option: B
Explanation:

The deposit is fixed and is repayable only after a specific period is over is called fixed deposit account.