Checks

Question 1

Receiving Checks

Answer 1

When a payment is received in the form of a check, it must be endorsed, or signed, before being deposited. Endorsing a check is a security measure used to verify the receiver of the check and authorizes the bank to complete the transaction.

Question 2

Blank Endorsement

Answer 2

This is the most common type of endorsement and is when the payee signs the back of the check without further instructions.

Question 3

Restrictive Endorsement

Answer 3

This type of endorsement restricts the use of the check. For a check to be deposited only, and not cashed, the payee signs the back of the check and adds, “for deposit only.” This can be further restricted by adding the specific account number for the check to be deposited into. Many banks now require “for mobile deposit only” to be added when using a mobile banking app to deposit a check remotely.

Question 4

Special Endorsement

Answer 4

This type of endorsement is used when the payee signs a check over to another party. The payee signs the back of the check and adds, “Pay to the order of” and the name of the new payee. The new payee can then endorse the check to deposit or cash it.

Question 5

Check Register

Answer 5

A check register is a detailed record of all the cash payments and deposits made by a business.

Question 6

Void

Answer 6

A not valid or legally binding check

Question 7

When void happen

Answer 7

A check may need to be voided if there’s an error when filling it out or to set up an automatic payment or direct deposit

Question 8

Dishonored Check

Answer 8

when a bank does not honor a check due to insufficient funds so the check gets bounced

Question 9

Proof of cash

Answer 9

a detailed bank reconciliation that validates all cash receipts and disbursements for a given period