Definition
Truncation has specific meanings in different contexts:
-
Banking: In the context of banking, truncation refers to the elimination of the service of returning canceled checks to customers. This means that instead of receiving their canceled checks along with their bank statements, customers get an electronic summary or image of the checks.
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Computers: In computing, truncation refers to the process of dropping digits to the right of the decimal point. For example, the truncation of 6.45 results in 6, and the truncation of 737.984 results in 737. This is usually contrasted with rounding, where numbers might be rounded to the nearest value instead of simply removing the decimal portion.
Examples
Banking
- A bank stops the physical return of canceled checks to account holders, instead providing scanned images or electronic records of the checks.
- Customers receive an online summary at the end of the statement period detailing transactions instead of receiving the canceled checks in the mail.
Computers
- Truncating the number 250.879 to 250.
- In a database, entering a value of 123.456 and applying truncation would store it as 123, thus ignoring the decimal places.
- Financial software truncating daily financial data values from 1023.78392 to 1023 for storage efficiency.
Frequently Asked Questions
What are the benefits of truncation in banking?
- Truncation in banking increases efficiency by reducing the handling and processing time of physical checks. It also saves costs related to printing, postage, and storage for both the bank and the customer.
How does truncation differ from rounding in computing?
- Truncation in computing simply removes all decimals after the specified place without altering the preceding numbers. Rounding, however, adjusts the last remaining number based on the eliminated numbers (e.g., rounding 3.456 to two decimal places results in 3.46).
Can truncation cause errors in calculations?
- Yes, truncation can lead to a loss of precision and may introduce errors, particularly in calculations requiring high accuracy, by consistently underrepresenting amounts.
Related Terms
- Rounding Off: Adjusting a numerical value to the nearest predetermined point.
- Decimal Places: The position of numbers to the right of the decimal point within a numerical value.
- Check Imaging: The process of scanning physical checks and storing images for electronic access.
Online References
Suggested Books for Further Studies
- “Principles of Banking” by G. Jay Francis
- “Computer Arithmetic: Principles, Architecture, and Design” by Kai Hwang
Fundamentals of Truncation: Banking and Computing Basics Quiz
### What is the primary service eliminated in banking truncation?
- [x] The return of canceled checks to customers.
- [ ] The processing of electronic fund transfers.
- [ ] The issuance of new bank cards.
- [ ] The provision of online banking access.
> **Explanation:** Banking truncation refers to the elimination of the service of returning canceled checks to customers.
### When truncating the number 75.923, what is the resulting number?
- [ ] 76
- [ ] 75.93
- [x] 75
- [ ] 75.92
> **Explanation:** Truncating the number 75.923 involves removing all digits to the right of the decimal, resulting in 75.
### What does truncation in computing typically lead to?
- [ ] Increased accuracy
- [x] Loss of precision
- [ ] Zero padding
- [ ] Decreased data storage needs
> **Explanation:** Truncation in computing leads to a loss of precision as the digits to the right of the decimal point are dropped.
### Is truncation the same as rounding off?
- [ ] Yes
- [x] No
- [ ] Sometimes
- [ ] Only in certain cases
> **Explanation:** Truncation is not the same as rounding off. Truncation removes digits without adjusting the preceding number, whereas rounding off adjusts the preceding digit based on the values being removed.
### Which sector benefits from truncation due to reduced costs and increased efficiency?
- [ ] Retail
- [ ] Manufacturing
- [ ] Healthcare
- [x] Banking
> **Explanation:** The banking sector benefits from truncation due to reduced costs and increased efficiency in processing checks.
### In computing, when 145.678 is truncated, what will the result be?
- [ ] 145.7
- [ ] 146
- [ ] 145.67
- [x] 145
> **Explanation:** Truncating 145.678 will result in 145, as all digits to the right of the decimal point are removed.
### Why might truncation in banking be preferable over retaining canceled checks?
- [x] Cost efficiency and resource savings
- [ ] Increased error in transaction records
- [ ] Reduced speed in check processing
- [ ] Increased customer complaints
> **Explanation:** Truncation in banking is preferable due to cost efficiency and resource savings.
### How is truncation typically represented in computing?
- [ ] By rounding up to the nearest whole number
- [x] By dropping digits after the decimal point
- [ ] By converting numbers to fractions
- [ ] By adding extra digits
> **Explanation:** Truncation in computing is typically represented by dropping digits after the decimal point.
### What is a potential drawback of truncation in computing?
- [ ] Increased accuracy of results
- [x] Introduction of calculation errors due to loss of precision
- [ ] Additional memory requirements
- [ ] Reduced processing speed
> **Explanation:** A potential drawback of truncation in computing is the introduction of calculation errors due to the loss of precision.
### What document would customers receive instead of canceled checks due to truncation in banking?
- [ ] Printed statement containing only deposit information
- [x] Electronic summary or image of checks
- [ ] A detailed account of all online transactions
- [ ] Monthly bank card usage report
> **Explanation:** Customers would receive an electronic summary or image of checks instead of canceled checks due to truncation in banking.
Thank you for exploring the concept of truncation in both banking and computing! Keep advancing your knowledge in these vital areas.
