More companies are cutting eliminating the acceptance of check payments from their business plans. According to Karen Aho, Whole Foods Markets, Fresh & Easy, and Banana Republic (a brand of Gap, Inc.) are just a few of the companies that refuse checks as payment from customers. According to the Federal Reserve, paying by check has declined by 6.4% since 2003. Financial services consultant, like James Neckopulos, believe that checks will be a thing of the past in 10 years.

QUESTIONS:

1. The article talks about how “paper costs money.” What are these costs associated with taking checks and where would they be accounted for on the financial statements?
2. Are there any costs associated with accepting credit card payments from customers? If so, how are these recorded in journal entries?
3. While some companies cite faster check-out lanes as an advantage of no-check policies, what are the financial advantages of accepting only cash, credit cards, or debit cards? What are some of the disadvantages in terms of customer relations?
4. Are payments by check reported separately on financial statements? If not, then where?

SOURCE:

Aho, K. (2009). Still Use Checks? Join the Dinosaurs. MSN.Money (Retrievable online at
http://articles.moneycentral.msn.com/Banking/BetterBanking/still-use-checks-join-the-dinosaurs.aspx)