Business Studies

Methods of Payment: Cheque - What is a Cheque?

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

Topics in Business Studies

Franchise Business Structure: Types, Advantages and Disadvantages What is Corporation? Types, Advantages and Disadvantages of Corporations What is Limited Liability Company? Its Advantages and Disadvantages Partnership in Business: Types, Advantages and Disadvantages Business Studies: What is Business Studies and Business? Management: Elements of Management What is Management? Importance of Management Advantages and Disadvantages of Air Transport Advantages and Disadvantages of Rail Transport Methods of Payment: Cheque - What is a Cheque? Cheque: Types of Cheque Cheque: Characteristics of Cheque Advantages and Disadvantages of Cheque Advertising and Types of Advertising Advantages and Disadvantages of Road Transport Advantages and Disadvantages of Water Transport Consumer Protection - Agencies of Consumer Protection Consumer Right and Protection Methods of Payment: Credit Cards and Debit Cards Methods of Payment: Bank Notes and Coins | Characteristics of Legal Tender


Academic Questions in Business Studies

Please check out our Test Your Knowledge page to see all Questions and Answers

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.

In buying and selling, the retailer will usually operate from the stall while the wholesaler operates from the _____.

  1. Chain store
  2. Hyper market
  3. Hypo market
  4. Warehouse
  5. Mobile shop
  6. Supermarket

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What is a Cheque?

A cheque (spelt as check in America) is a written order to a bank to pay a specific sum of money to another person through the drawer's account.

Note: The person who writes and signs on the cheque is called the drawer. The bank that issues the cheque to the drawer is called the drawee. The person to whom the cheque is made payable (one who would cash the cheque) is called the payee.

Please read on Credit Cards and Debit Cards as Methods of Payments here.

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 bank) 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 the Characteristics of Cheque here.

Note: Cheques are considered as one of the methods of making payment alongside bank notes and coins, debit card, credit card and bank drafts.

Please read on Bank Notes and Coins with their Characteristics here.

Whenever the drawer intends to make a payment via cheque, it is required that they tear out a slip from the cheque book. They will also be required to write the name of the payee in the cheque book along side the amount to be paid, the signature of the drawer and date.

The image below shows what a cheque should look like:

Cheque - Len Academy

Note: The amount to be paid on the cheque slip is entered twice. The first entry is made in words while the second entry is made in figures.

The payee will be able to cash the cheque as indicated in the cheque slip. The payee may also need a valid identity card as a means of identification before he or she can cash the cheque.

Please read on National Symbols in Nigeria here.

When a bank pays the amount written on a cheque to the payee, such cheque is considered as being honoured. Conversely, when the cheque order is isn't paid, the cheque is referred to as a dishonoured cheque.

Note: The owner of a cheque must have a current account or cheque account with a bank. A savings account can also serve this purpose but the person will need to fulfill all the necessary conditions required to own a cheque book; for instance, meeting up with a specific account balance.

One of the reasons why cheques are used as a method of making payment is due to it's security and convenience. This is so because the process of carrying bulky cash will be avoided when making payments. As a result, the loss of cash is minimized.

Please read on the Advantages and Disadvantages of Cheques here.

It is important to state that a cheque is always considered as a negotiable instrument. This is so because just as cash, it can be tendered as a cash document during business negotiations. In this way, it will represent an individual's access to money via a financial institution.

Types of Cheque

We have various types of cheque. Some of these include:

  1. Open Cheque or Uncrossed Cheque
  2. Crossed Cheque
  3. Bearer Cheque
  4. Order Cheque
  5. Stale Cheque
  6. Cash Cheque
  7. Anti-Dated Cheque
  8. Post-Dated Cheque
  9. Please read on the explanations of the various Types of Cheque here.

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len

Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 7 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.


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Amazing facts in Business Studies

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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