check kiting

(noun)

a form of check fraud, involving taking advantage of the float to make use of non-existent funds in a checking or other bank account.

Examples of check kiting in the following topics:

  • Managing Float

    • Float is most apparent in the time delay between a check being written and the funds to cover that check being deducted from the payer's account.
    • In check clearing, bank float and customer float are present.
    • Before electronic check clearing, bad weather or communication problems often caused float to significantly increase, as the clearing of checks was delayed.
    • Another aspect of float time is its use to defraud, commonly known as check kiting.
    • Some methods for accomplishing this include mailing checks far away from those waiting to receive payment, disbursing checks from a remote bank, or purchasing with credit cards.
  • The Check Clearing Proces

    • The Fed has the authority to clear checks, and the check clearing process can cause bank reserves and the money supply to fluctuate through the Federal Reserve float.
    • Computer firm deposits the check in its bank account.
    • Subsequently, its bank sends the check to the Fed because the Fed can clear the check between your bank and the computer firm's bank.
    • Your check for $1,000 no longer exists in two places.
    • Check clearing process is a long-drawn-out process because if you write a check for $100 and
  • Forms of Money

    • Third payment system, a check, is credit money tied to a person's checking account.
    • Once sellers accept a check, they present the check to a bank for payment.
    • Consequently, checks have three benefits.
    • However, checks create two problems.
    • First, the financial institution charges fees for using checks, or the check writers abuse their accounts and write fraudulent checks for amounts that exceed their account balances.
  • A Bank's Balance Sheet

    • Checking and savings accounts are very popular in the United States.
    • They make payments by using checks that transfer money from one bank and to another bank.
    • Then checking accounts become one the most important deposit accounts.
    • These accounts earn interest and do not allow check-writing privileges.
    • However, savings accounts have fewer services than checking accounts.
  • Chapter Questions

    • Calculate the change in the M1 definition of the money supply if a person deposits $1,000 in cash into his checking account.
    • Compute the change in the M1 definition of the money supply if a person withdraws $5,000 in cash from his checking account.
  • Bitcoins

    • For example, you buy $500 in clothes from an internet store and send a check to the seller.
    • Next, the seller deposits the check into his or her bank account.
    • Seller's bank sends information about the check to the clearinghouse and the clearinghouse checks with your bank.
    • Your bank checks your balance ensuring you have enough funds in the account to pay the check.
  • The Fed's Balance Sheet

    • The Fed buys the T-bill by using a Fed check.
    • When the bank sends the check to the Fed, the Fed increases the reserves at your bank.
    • A Fed check is not backed by money per se.
    • As the Fed clears its own check, it adds numbers to a bank's accounting books.
    • For the second example, the Fed buys one T-bill from you for $10,000, using a Fed check.
  • Multiple Deposit Expansion and Contraction

    • You take the Fed check and deposit the whole $10,000 at your bank into your checking account.
    • Bank sends your friend a check for $9,000.
    • Your friend takes this check to a car dealership and buys a car.
    • Car dealer deposits this check at his bank, and we record this transaction below:
    • Construction company receives a check for $8,100 and deposits this check in its bank.
  • The Fed's Balance Sheet

    • For instance, the students learn how the Fed clears a check between two banks.
    • Items in the Process of Collection (CIPC) are assets that arise from the Fed's check clearing process, and it equaled $138 million in 2012.
    • We show the check clearing process in this chapter.
    • Then the Treasury Department writes checks on its Fed account.
    • We explain the check clearing process in this chapter.
  • Residual Dividend Model

Subjects
  • Accounting
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