Future Business Leaders of America (FBLA) Accounting Practice Test

What is a signature card used for in banking?

1. To summarize employee tax deductions

2. To confirm a depositor's signature on file

3. To calculate quarterly tax returns

4. To document cash withdrawals

The correct answer is: To confirm a depositor's signature on file

A signature card is an essential document used by banks to verify the identity of account holders. It is primarily maintained to have a reliable record of the depositor’s signature on file. When an individual opens a bank account, they complete a signature card that includes their signature, which the bank uses for comparison when the account holder conducts transactions. This ensures that the bank can authenticate the identity of the customer when they make withdrawals, deposits, or any other transaction that requires their signature. This process helps prevent fraud and unauthorized access to the account. Other options, while related to different banking functions, do not pertain to the primary purpose of a signature card. For instance, summarizing employee tax deductions and calculating quarterly tax returns are tasks more aligned with payroll and tax accounting rather than banking operations. Documenting cash withdrawals may occur during transactions but does not relate to the verification of the depositor's identity in the way a signature card does. Thus, confirming a depositor's signature on file is the specific function that distinguishes the role of a signature card in banking.