Bookkeeping 36

Question 1

1. p 86. CHECKING ACCOUNTS. What is a NEGOTIABLE INSTRUMENT?

Answer 1

A written promise of one person to pay a specific sum of money either on demand or at a certain date in the future.

Question 2

2. What is a DEMAND ACCOUNT?

Answer 2

Checking account

Question 3

3. What is a CHECK?

Answer 3

It is a written instrument that is signed by the DEPOSITOR on a DEMAND ACCOUNT (Checking Account), ordering the bank to pay a specified amount to a designated party.

Question 4

4. What are the THREE parties involved when a check is written?

Answer 4

DRAWER
PAYEE
DRAWEE

Question 5

5. Who is the DRAWER?

Answer 5

The DRAWER creates the check and signs it on its FACE.

Question 6

6. Who is the PAYEE?

Answer 6

The PAYEE receives the check and MUST ENDORSE IT (sign it in the back) to cash or deposit it.

Question 7

7. Who is the DRAWEE?

Answer 7

The DRAWEE is the bank on which the FACE AMOUNT is DRAWN.

Question 8

8. What is the FACE AMOUNT?

Answer 8

The SUM for which the CHECK IS WRITTEN.