29. Acceptances. A draft when accepted—that is, when it becomes an acceptance—has the same value as a promissory note, for it is a definite promise to pay on a specified date. Drafts are used for the collection of accounts in other cities than the one in which the creditor's place of business is located. A draft may call for payment a certain number of days after date, or it may call for payment at sight. The former is known as a time draft, while the latter is a sight draft.
30. Discount and Exchange. When a promissory note is taken to the bank for the purpose of raising money, it is customary for the banks to calculate the interest for the time the note is to run, and to deduct this from the principal, giving the borrower the net amount only. In other words, the interest is paid in advance, and such advance payment of interest is called discount.
When a draft is collected through a bank, a small fee is charged, and this fee is called exchange. Exchange is also charged for the collection of out-of-town checks, especially if they are drawn on banks in small towns and cities.
BANK DEPOSITS
31. When money is deposited in a bank, a list of the items in the deposit is made on a blank known as a deposit ticket or deposit slip. These deposit tickets are furnished by the bank for the convenience of its customers.
32. Signature Card. Money deposited in a bank can be withdrawn only by presenting a written order or check, signed by the one in whose name the money is deposited. That the bank may know that money is not paid on checks that do not bear the correct signature, each depositor is required to leave at the bank the signature or signatures which are to be honored. These signatures are written on a card, known as a signature card, which the bank keeps for reference.
33. Check Books. Blank checks are usually bound in book form, the checks themselves being perforated so that they can be easily removed. These check books are in most cases furnished by the bank. The number of checks on a page varies, but is seldom more than four. When a check is written, the number, date, name, and amount should be written on the face of the stub. To keep a convenient record of the balance in the bank, it is well to enter a list of all checks and deposits on the back of the check stubs.
Signature Card
34. Pass Book. The bank pass-book should be taken to the bank whenever a deposit is made, as it contains the bank's receipt for all money deposited.