Banking
Premature Fixed Deposit Break — Penalty Income
A customer breaks their fixed deposit early, incurring a penalty charged by the bank.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Fixed Term Deposits (Liability) | Liability (-) | 50,000.00 | - |
| Cash / Customer Account (Net) | Liability (-) | - | 49,500.00 |
| Early Withdrawal Penalty Income | Revenue (+) | - | 500.00 |
💡 Accountant's Note
Early termination penalties compensate the bank for the disruption to its liquidity planning. The penalty is Other Income; the deposit principal is returned net of the penalty.
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