Examkin

Question

Difficulty: EasyForms and Instruments of Credit

A crossed cheque can be cashed directly over the counter at a commercial bank upon presentation by the holder.

Answer: Answer

Answer

False. A crossed cheque cannot be cashed over the counter; it must be deposited into a bank account.
The statement is false because crossing a cheque prevents over-the-counter cash payment to ensure security, requiring the money to be transferred directly into an account.

Step-by-Step Solution

1
Identify the structural feature of a crossed cheque.
A crossed cheque has two parallel transverse lines drawn across its face.
This visual marking instructs the drawer's bank on how the cheque should be honored.
2
Determine the legal rule governing crossed cheque payments.
Funds must be credited to an account; cash payment over the counter is prohibited.
Crossing protects the drawer and payee against loss or theft by creating an audit trail through the banking system.

Key Concept

Crossed Cheque Payment Restrictions
Rate this question

Topics

Forms and Instruments of Credit

More questions from this topic