Business Studies

Cheque: Characteristics of Cheque

len Alfred Ajibola - Fri, 20th December, 2019 @ 09:47 AM

Topics in Business Studies

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Academic Questions in Business Studies

Please click here to see all Questions and Answers

An accounting system focused primarily on a balanced debit and credit side is termed _____.

  • A. Ledger system

  • B. Journal system

  • C. Double entry system

  • D. Balance sheet system

  • E. Principle of accounting system

  • F. Balanced accounting system

With regards to money, which of the following statement is incorrect?

  • A. Money is crucial for the survival of every human being

  • B. Money is completely advantageous

  • C. Money is defined as anything that is generally accepted as a medium of exchange

  • D. Monopoly is said to exist when money and wealth exists in the hands of a few

  • E. Excess money in an economy can lead to inflation

  • F. When a person receives money that isn't commensurate with the job he or she had done, then that's underemployment

Which of the following statement is wrong with regards to business?

  • A. Business involves the exchange of something for another thing or money

  • B. Business is an economic activity

  • C. In business, profit goes beyond money

  • D. Businesses do not have social responsibilities to their customers

  • E. The exchange of services is an aspect of business

  • F. Businesses can be affected by government policies

Consumer _____ are the laws and methods put in place by various agencies so that consumers can enjoy maximum satisfaction on the goods they buy and services rendered to them.

  • A. Protection
  • B. Policy
  • C. Rights
  • D. Defence
  • E. Guide
  • F. Safety

Which of the following is not a characteristics of business?

  • A. The buyer and seller must always come into a contract agreement

  • B. Risk from unforseen circumstances is involved

  • C. They are subject to policies made by the government

  • D. All business transaction is aimed at making profit

  • E. It requires a discontinuous transaction between the buyer and the seller

  • F. Investments are required to begin a business

Which of the following is not a Right of Consumer Protection?

  • A. Right to Education
  • B. Right to Choose
  • C. Right to Safety
  • D. Right to the Good things of Life
  • E. Right to be Assured
  • F. Right to Compel

Which of the following is NOT a government agency of consumer protection?

  • A. Ministry of Sports
  • B. Ministry of Commerce
  • C. Consumer Protection Council
  • D. Ministry of Health
  • E. Ministry of Environment
  • F. National Drug Law Enforcement Agent

Define Consumer Protection.

Characteristics of a Cheque:

A cheque is a written order to a bank requesting a specific sum of money to be paid to another person through the drawer's account.

Below are the characteristics or features of a cheque:

1. A cheque is an unconditional order

A cheque may be defined as an order to pay a person (called the payee) from another's account (that is; the drawer). A cheque is not made to be paid to a person based on conditions.

Please read the introduction to cheque here.

As an instance, a cheque cannot read: 'pay her if she comes along with the rent receipt'. In short, a written document made to conditionally receive money isn't a cheque in the first place. Such is considered as invalid.


2. A transaction involving a cheque will always have three parties

The three parties involved in the transaction involving a cheque are the drawer, drawee and payee.

  • A drawer is a person who writes or draws or signs a cheque to his bank account, ordering his bank to pay the money specified on the cheque to another person (called the payee). The drawer is also referred to as the maker.

  • The drawee is the entity (typically a financial institution) whom the drawer gives an order to pay the payee. The drawee is always the party upon whom the cheque is drawn.

  • A payee is an individual or an entity (organization) to whom the cheque is made payable. The payee is responsible for cashing out the cheque: that is, gets paid through the cheque.

Please read on credit and debit card here.


3. A cheque must always be written

A drawer must write a cheque to the payee. There isn't anything like an oral cheque.

A cheque is usually written through an ink pen, but it can also be typed or printed.


4. Payment through cheque is made via cash or transfers

Payments through cheque will be made to the payee by the drawer either in cash or by transfer. Meanwhile, understand that the transfer of money through cheques can be made into the payee's bank account or a third party's bank account.

Payments via transfer is usually accomplished via a crossed cheque. If a third party is involved in the transfer of payments, such is termed the 'transferor'.

Please read on bank wire and wire transfer here.


5. The cheque is drawn on a specified banker only

A cheque is usually drawn on a bank (termed drawee) where the drawer has an account. This implies that the drawer must be a customer of the bank. To this end, cheque books are made available to some account holders in the bank who meet the necessary criteria in regards to owning a cheque book.

The bank's customer owning a cheque book will usually have accounts that are current. However, a savings account may also serve this purpose.

You can read on the characteristics of business here.


6. The drawer of the cheque must sign a dated cheque

A cheque that has no date and isn't signed by the drawer is not considered a cheque. Such is regarded as invalid.

For a cheque to be considered valid, it must have the drawer's signature and a date.


7. The drawee is liable only to the drawer

The drawee or banker on whom the cheque is drawn shall be liable only to the drawer. This is so because in a situation where the cheque is dishonoured, the bearer (payee) has no remedy for such a dishonoured cheque. However, the drawer on his part can still make things right.

Please read on the advantages and disadvantages of cheques here.


8. Only a specific amount can be paid via a cheque

A cheque must contain an order to pay a specific sum of money to the payee.

Apart from the payment of money, if a cheque is drawn to do other things, then such is not considered a cheque. As an instance, a cheque cannot read pay N5,000 to Alfred Ajibola and recharge his phones with a card worth N2,500.

Please read on bank notes and coins as methods of payment here.


9. A cheque is payable on demand

When the payee tenders a properly written cheque to the appropriate drawee (bank), the cheque will usually be honoured; that is, made payable to the payee.

However, depending on the type of cheque, the identity of the payee may be ratified.


10. A cheque must be duly dated to confirm its validity

Present on the cheque must be a clearly written date. The date comprises the day, month and year.

Note: In most cases, a cheque is verified as valid for a period of three months (or six months) from the day of issue.

A post-dated cheque and an anti-dated cheque cannot be invalid; rather, their validity is determined to commence from the written date on both cheques.

Please read on post-dated, anti-dated and other types of cheque here.


11. The cheque does not require an acceptance or a stamp

On the part of the drawee (or bank), the cheque requires neither a stamp nor another form of acceptance.

Meanwhile, there is this caveat among banks to mark a cheque as 'good' for the purpose of clearance. Such markings aren't considered as a cheque's acceptance.


12. A cheque may be payable to the drawer himself

A cheque drawn or writen by the drawer may be made payable to the drawer; and such cheque will be honoured.

Interestingly, it is quite common to see cheques made payable to the bearer at his or her demand.

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Amazing facts in Business Studies

The world's 100 richest people earned enough money in 2012 to end global poverty four times over

NOTABLE POINTS IN Business Studies

Consumer protection refers to the ways or methods through which consumers enjoy maximum satisfaction from the goods they buy and services rendered to them.

The agencies of consumer protection assists in protecting the consumer rights. These agencies may also be referred to as the organs of consumer protection. Basically, we have three of them, they are:

  1. Government Agencies

  2. Independent Agencies

  3. Legislation

Please read on consumer protection here

One of the responsibilities of the government of every nation is to set up agencies or organizations that will protect the interest of the consumers and invariably, the people.

Below are some of the government agencies of consumer protection:

  • National Drug Law Enforcement Agency (NDLEA)
  • National Agency for Food, Drug Administration and Control (NAFDAC)
  • Consumer Protection Council (CPC)
  • Rent Tribunal
  • Ministry of Health
  • Ministry of Commerce
  • Ministry of Transportation
  • Ministry of Environment
  • National Wages and Salaries Commission

Please read on the government agencies of consumer protection here