kinds of bankinkinds of banking instrumentsg instruments

7/29/2019 Kinds of BankinKINDS OF BANKING INSTRUMENTSg Instruments

1/12

Office Documents

Invoice

An invoice orbill is acommercialdocumentissued by asellerto thebuyer, indicating the

products, quantities, and agreedpricesfor

products orservicesthe seller has provided the

buyer. An invoice indicates the sale transaction

only.Payment termsare independent of the

invoice and are negotiated by the buyer and the

seller. Payment terms are usually included on the

invoice. The buyer could have already paid for

the products or services listed on the invoice.

Buyer can also have a maximum number of days

in which to pay for these goods and is sometimes

offered a discount if paid before the due date.

In the rental industry, an invoice must include a

specific reference to the duration of the time

being billed, so in addition to quantity, price and discount the invoicing amount is also based

on duration. Generally each line of a rental invoice will refer to the actual hours, days, weeks,

months, etc., being billed.

From the point of view of a seller, an invoice is asales invoice. From the point of view of a

buyer, an invoice is apurchase invoice. The document indicates the buyer and seller, but theterm invoice indicates money is owed orowing. In English, the context of the term invoice is

usually used to clarify its meaning, such as "We sent them an invoice" (they owe us money)

or "We received an invoice from them" (we owe them money).

There are different types of invoices:

Pro formainvoice Inforeign trade, apro forma invoice is a document that states a

commitment from the seller to provide specified goods to the buyer at specific prices. It is

often used to declare value forcustoms. It is not a true invoice, because the seller does not

record apro forma invoice as anaccounts receivableand the buyer does not record apro

forma invoice as anaccounts payable. Apro forma invoice is not issued by the seller until theseller and buyer have agreed to the terms of theorder. In few cases,pro forma invoice is

issued for obtaining advance payments from buyer, either for start of production or for

security of the goods produced.

Credit memo- If the buyer returns the product, the seller usually issues a credit memo for

the same or lower amount than the invoice, and then refunds the money to the buyer, or

the buyer can apply that credit memo to another invoice.

Commercial invoice- acustomsdeclaration form used in international trade that describes

the parties involved in the shipping transaction, the goods being transported, and the value

of the goods.

[6]

It is the primary document used by customs, and must meet specific customs
http://en.wikipedia.org/wiki/Commercehttp://en.wikipedia.org/wiki/Commercehttp://en.wikipedia.org/wiki/Commercehttp://en.wikipedia.org/wiki/Saleshttp://en.wikipedia.org/wiki/Saleshttp://en.wikipedia.org/wiki/Saleshttp://en.wikipedia.org/wiki/Buyerhttp://en.wikipedia.org/wiki/Buyerhttp://en.wikipedia.org/wiki/Buyerhttp://en.wikipedia.org/wiki/Product_%28business%29http://en.wikipedia.org/wiki/Product_%28business%29http://en.wikipedia.org/wiki/Pricehttp://en.wikipedia.org/wiki/Pricehttp://en.wikipedia.org/wiki/Pricehttp://en.wikipedia.org/wiki/Service_%28economics%29http://en.wikipedia.org/wiki/Service_%28economics%29http://en.wikipedia.org/wiki/Service_%28economics%29http://en.wikipedia.org/wiki/Payment_termshttp://en.wikipedia.org/wiki/Payment_termshttp://en.wikipedia.org/wiki/Payment_termshttp://en.wikipedia.org/wiki/Pro_formahttp://en.wikipedia.org/wiki/Pro_formahttp://en.wikipedia.org/wiki/Foreign_tradehttp://en.wikipedia.org/wiki/Foreign_tradehttp://en.wikipedia.org/wiki/Foreign_tradehttp://en.wikipedia.org/wiki/Customshttp://en.wikipedia.org/wiki/Customshttp://en.wikipedia.org/wiki/Customshttp://en.wikipedia.org/wiki/Accounts_receivablehttp://en.wikipedia.org/wiki/Accounts_receivablehttp://en.wikipedia.org/wiki/Accounts_receivablehttp://en.wikipedia.org/wiki/Accounts_payablehttp://en.wikipedia.org/wiki/Accounts_payablehttp://en.wikipedia.org/wiki/Accounts_payablehttp://en.wikipedia.org/wiki/Order_%28business%29http://en.wikipedia.org/wiki/Order_%28business%29http://en.wikipedia.org/wiki/Order_%28business%29http://en.wikipedia.org/wiki/Credit_memohttp://en.wikipedia.org/wiki/Credit_memohttp://en.wikipedia.org/wiki/Commercial_invoicehttp://en.wikipedia.org/wiki/Commercial_invoicehttp://en.wikipedia.org/wiki/Customshttp://en.wikipedia.org/wiki/Customshttp://en.wikipedia.org/wiki/Customshttp://en.wikipedia.org/wiki/Invoice#cite_note-6http://en.wikipedia.org/wiki/Invoice#cite_note-6http://en.wikipedia.org/wiki/Invoice#cite_note-6http://en.wikipedia.org/wiki/Invoice#cite_note-6http://en.wikipedia.org/wiki/Customshttp://en.wikipedia.org/wiki/Commercial_invoicehttp://en.wikipedia.org/wiki/Credit_memohttp://en.wikipedia.org/wiki/Order_%28business%29http://en.wikipedia.org/wiki/Accounts_payablehttp://en.wikipedia.org/wiki/Accounts_receivablehttp://en.wikipedia.org/wiki/Customshttp://en.wikipedia.org/wiki/Foreign_tradehttp://en.wikipedia.org/wiki/Pro_formahttp://en.wikipedia.org/wiki/Payment_termshttp://en.wikipedia.org/wiki/Service_%28economics%29http://en.wikipedia.org/wiki/Pricehttp://en.wikipedia.org/wiki/Product_%28business%29http://en.wikipedia.org/wiki/Buyerhttp://en.wikipedia.org/wiki/Saleshttp://en.wikipedia.org/wiki/Commerce


2/12

requirements, such as theHarmonized Systemnumber and the country of manufacture. It is

used to calculatetariffs.

Debit memo - When a company fails to pay or short-pays an invoice, it is common practice

to issue a debit memo for thebalanceand any late fees owed. In function debit memos are

identical to invoices.

Self-billing invoice - A self billing invoice is when the buyer issues the invoice to himself (e.g.

according to the consumption levels he is taking out of avendor-managed inventorystock).

The buyer (i.e. the issuer) should treat the invoice as an account payable, and the seller

should treat it as an account receivable. If there is tax on the sale, e.g. VAT or GST, then

buyer and seller may need to adjust their tax accounts in accordance with tax legislation.[7]

Evaluated receipt settlement (ERS) - ERS is a process of paying for goods and services from a

packing sliprather than from a separate invoice document. The payee uses data in the

packing slip to apply the payments. "In an ERS transaction, the supplier ships goods based

upon an Advance Shipping Notice (ASN), and the purchaser, uponreceipt, confirms theexistence of a corresponding purchase order or contract, verifies the identity and quantity of

the goods, and then pays the supplier."[8]

Timesheet - Invoices for hourly services such as bylawyersandconsultantsoften pull data

from atimesheet. A Timesheet invoice may also be generated byOperated equipment

rental companieswhere the invoice will be a combination of timesheet based charges and

equipment rental charges.

Invoicing - The term invoicing is also used to refer to the act ofdeliveringbaggageto aflight

companyin anairportbefore taking a flight.[citation needed]

Statement - A periodic customer statement includes opening balance, invoices, payments,

credit memos, debit memos, and ending balance for the customer's account during a

specified period. A monthly statement can be used as a summary invoice to request a single

payment for accrued monthly charges.

Progress billing used to obtain partial payment on extended contracts, particularly in the

construction industry (seeSchedule of values)

Collective Invoicing is also known as monthly invoicing inJapan. Japanese businesses tend to

have many orders with small amounts because of the outsourcing system (Keiretsu), or of

demands for less inventory control (Kanban). To save the administration work, invoicing isnormally processed on monthly basis.

Continuation or Recurring Invoicing is standard within the equipment rental industry,

including tool rental. A recurring invoice is one generated on a cyclical basis during the

lifetime of a rental contract. For example if you rent an excavator from 1 January to 15 April,

on a calendar monthly arrears billing cycle, you would expect to receive an invoice at the

end of January, another at the end of February, another at the end of March and a final Off-

rent invoice would be generated at the point when the asset is returned. The same principle

would be adopted if you were invoiced in advance, or if you were invoiced on a specific day

of the month.
http://en.wikipedia.org/wiki/Harmonized_Systemhttp://en.wikipedia.org/wiki/Harmonized_Systemhttp://en.wikipedia.org/wiki/Harmonized_Systemhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Balance_%28accounting%29http://en.wikipedia.org/wiki/Balance_%28accounting%29http://en.wikipedia.org/wiki/Balance_%28accounting%29http://en.wikipedia.org/wiki/Vendor-managed_inventoryhttp://en.wikipedia.org/wiki/Vendor-managed_inventoryhttp://en.wikipedia.org/wiki/Vendor-managed_inventoryhttp://en.wikipedia.org/wiki/Invoice#cite_note-7http://en.wikipedia.org/wiki/Invoice#cite_note-7http://en.wikipedia.org/wiki/Invoice#cite_note-7http://en.wikipedia.org/wiki/Packing_sliphttp://en.wikipedia.org/wiki/Packing_sliphttp://en.wikipedia.org/wiki/Receipthttp://en.wikipedia.org/wiki/Receipthttp://en.wikipedia.org/wiki/Receipthttp://en.wikipedia.org/wiki/Invoice#cite_note-8http://en.wikipedia.org/wiki/Invoice#cite_note-8http://en.wikipedia.org/wiki/Invoice#cite_note-8http://en.wikipedia.org/wiki/Lawyerhttp://en.wikipedia.org/wiki/Lawyerhttp://en.wikipedia.org/wiki/Lawyerhttp://en.wikipedia.org/wiki/Consultanthttp://en.wikipedia.org/wiki/Consultanthttp://en.wikipedia.org/wiki/Consultanthttp://en.wiktionary.org/wiki/timesheethttp://en.wiktionary.org/wiki/timesheethttp://en.wiktionary.org/wiki/timesheethttp://en.wikipedia.org/wiki/Operated_equipment_rentalhttp://en.wikipedia.org/wiki/Operated_equipment_rentalhttp://en.wikipedia.org/wiki/Operated_equipment_rentalhttp://en.wikipedia.org/wiki/Operated_equipment_rentalhttp://en.wikipedia.org/wiki/Delivery_%28business%29http://en.wikipedia.org/wiki/Delivery_%28business%29http://en.wikipedia.org/wiki/Luggagehttp://en.wikipedia.org/wiki/Luggagehttp://en.wikipedia.org/wiki/Luggagehttp://en.wikipedia.org/wiki/Airlinehttp://en.wikipedia.org/wiki/Airlinehttp://en.wikipedia.org/wiki/Airlinehttp://en.wikipedia.org/wiki/Airlinehttp://en.wikipedia.org/wiki/Airporthttp://en.wikipedia.org/wiki/Airporthttp://en.wikipedia.org/wiki/Airporthttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Schedule_of_valueshttp://en.wikipedia.org/wiki/Schedule_of_valueshttp://en.wikipedia.org/wiki/Schedule_of_valueshttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Keiretsuhttp://en.wikipedia.org/wiki/Keiretsuhttp://en.wikipedia.org/wiki/Keiretsuhttp://en.wikipedia.org/wiki/Kanbanhttp://en.wikipedia.org/wiki/Kanbanhttp://en.wikipedia.org/wiki/Kanbanhttp://en.wikipedia.org/wiki/Kanbanhttp://en.wikipedia.org/wiki/Keiretsuhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Schedule_of_valueshttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Airporthttp://en.wikipedia.org/wiki/Airlinehttp://en.wikipedia.org/wiki/Airlinehttp://en.wikipedia.org/wiki/Luggagehttp://en.wikipedia.org/wiki/Delivery_%28business%29http://en.wikipedia.org/wiki/Operated_equipment_rentalhttp://en.wikipedia.org/wiki/Operated_equipment_rentalhttp://en.wiktionary.org/wiki/timesheethttp://en.wikipedia.org/wiki/Consultanthttp://en.wikipedia.org/wiki/Lawyerhttp://en.wikipedia.org/wiki/Invoice#cite_note-8http://en.wikipedia.org/wiki/Receipthttp://en.wikipedia.org/wiki/Packing_sliphttp://en.wikipedia.org/wiki/Invoice#cite_note-7http://en.wikipedia.org/wiki/Vendor-managed_inventoryhttp://en.wikipedia.org/wiki/Balance_%28accounting%29http://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Harmonized_System


3/12

Electronic Invoicing is not necessarily the same as EDI invoicing. Electronic invoicing in its

widest sense embraces EDI as well as XML invoice messages as well as other format such as

pdf. Historically, other formats such as pdf were not included in the wider definition of an

electronic invoice because they were not machine readable and the process benefits of an

electronic message could not be achieved. However, as data extraction techniques have

evolved and as environmental concerns have begun to dominate the business case for theimplementation of electronic invoicing, other formats are now incorporated into the wider

definition.

Utility bills

Bills fromutilitycompanies are based on measured (metered) use of electricity, natural gas or

other utilities at a residence or business.[9][10]When an individual or business applies for

service from the utility (opens an account), he can signs an agreement (contract) to pay for

his metered use of the utility.

Purchase ledger

A purchase ledger is a system inaccountancyby which a business records and monitors its

creditors. The purchase ledger contains the individual accounts of suppliers from whom the

business has made purchases oncredit. Information oninvoicesandcredit notesreceived,

and payments made, are recorded in the supplier's account using thedebits and credits

system, with thebalanceof each account at a given moment representing the amount

currently owed to that supplier.

Historically, the purchase ledger was maintained in book form, hence the termledger, but in

modern practice it is much more likely to be held on computer usingaccountancy softwareor
http://en.wikipedia.org/wiki/Public_utilityhttp://en.wikipedia.org/wiki/Public_utilityhttp://en.wikipedia.org/wiki/Public_utilityhttp://en.wikipedia.org/wiki/Invoice#cite_note-9http://en.wikipedia.org/wiki/Invoice#cite_note-9http://en.wikipedia.org/wiki/Invoice#cite_note-9http://en.wikipedia.org/wiki/Accountancyhttp://en.wikipedia.org/wiki/Accountancyhttp://en.wikipedia.org/wiki/Accountancyhttp://en.wikipedia.org/wiki/Creditorhttp://en.wikipedia.org/wiki/Creditorhttp://en.wikipedia.org/wiki/Credit_%28finance%29http://en.wikipedia.org/wiki/Credit_%28finance%29http://en.wikipedia.org/wiki/Credit_%28finance%29http://en.wikipedia.org/wiki/Invoicehttp://en.wikipedia.org/wiki/Invoicehttp://en.wikipedia.org/wiki/Invoicehttp://en.wikipedia.org/wiki/Credit_notehttp://en.wikipedia.org/wiki/Credit_notehttp://en.wikipedia.org/wiki/Credit_notehttp://en.wikipedia.org/wiki/Debits_and_creditshttp://en.wikipedia.org/wiki/Debits_and_creditshttp://en.wikipedia.org/wiki/Debits_and_creditshttp://en.wikipedia.org/wiki/Balance_%28accounting%29http://en.wikipedia.org/wiki/Balance_%28accounting%29http://en.wikipedia.org/wiki/Balance_%28accounting%29http://en.wikipedia.org/wiki/Ledgerhttp://en.wikipedia.org/wiki/Ledgerhttp://en.wikipedia.org/wiki/Ledgerhttp://en.wikipedia.org/wiki/Accounting_softwarehttp://en.wikipedia.org/wiki/Accounting_softwarehttp://en.wikipedia.org/wiki/Accounting_softwarehttp://en.wikipedia.org/wiki/Accounting_softwarehttp://en.wikipedia.org/wiki/Ledgerhttp://en.wikipedia.org/wiki/Balance_%28accounting%29http://en.wikipedia.org/wiki/Debits_and_creditshttp://en.wikipedia.org/wiki/Credit_notehttp://en.wikipedia.org/wiki/Invoicehttp://en.wikipedia.org/wiki/Credit_%28finance%29http://en.wikipedia.org/wiki/Creditorhttp://en.wikipedia.org/wiki/Accountancyhttp://en.wikipedia.org/wiki/Invoice#cite_note-9http://en.wikipedia.org/wiki/Invoice#cite_note-9http://en.wikipedia.org/wiki/Public_utility


4/12

aspreadsheet. The purchase ledger will ordinarily hold a credit balance, unless credit notes or

over-payments exceed the credit balance.order form).

The purchase ledger will ordinarily hold a credit balance, unless credit notes or over-

payments exceed the credit balance.order form)

Debit Note

A document used by a purchaser to inform a vendor of the quantity and dollar amount ofgoods being returned, and requesting that the dollar amount be returned to the purchaser. A

debit note is often used to return goods on credit. The vendor then issues a credit note to the

purchaser indicating that the goods have been received, and that the purchaser will not have

to pay for them.

Also known as a "debit memo".

Debit notes are generally used in business-to-business transactions. Such transactions often involve

an extension of credit, meaning that a vendor would send a shipment of goods to a company before

the goods have been paid for. Although real goods are changing hands, until an actual invoice is

issued, real money is not. Rather, debits and credits are being logged in an accounting system to

keep track of inventories shipped and payments owed.

Receipt

A receipt is a written acknowledgment that a specified article or sum of money has been received. A

receipt records the purchase of goods or service obtained in an exchange. A receipt and a bill are not

the same, they are two different things.
http://en.wikipedia.org/wiki/Spreadsheethttp://en.wikipedia.org/wiki/Spreadsheethttp://en.wikipedia.org/wiki/Spreadsheethttp://en.wikipedia.org/wiki/Spreadsheet


5/12

In English speaking countries, the term most frequently applies

to the printed record given to a consumer atcheckoutthat lists

the purchases made. The total amount of thetransaction

includingtaxes,discountsand other adjustments, the amount

paid and themethod of payment. Increasingly, these receipts

may also include messages from the retailer,warrantyor return

details, special offers, advertisements orcoupons. Receipts may

also be provided for non-retail operations such as banking

transactions. A receipt is a legal document.[2]

In many countries,

notably the United States of America, it is mandatory by law for

retailers, and individuals, have to show receipts and store

information about every receipt, so that the tax authority, or

IRScan check that sales are not hidden

Order Form

A purchase order (PO) or

Order From is a

commercialdocument

issued by abuyerto a

seller, indicating types,

quantities, and agreed

prices for products or

services the seller willprovide to the buyer.

Sending a purchase order

to a supplier constitutes a

legal offer to buy products

or services. Acceptance of

a purchase order by a seller

usually forms acontract

between the buyer and

seller, so no contract exists

until the purchase order is

accepted. It is used tocontrol the purchasing of

products and services from

external suppliers.[1]

Creating a purchase order

is typically the first step of

theOrder-to-cash process

in anERP system. Examples of SaaS providers automating this process includeTradeCard

andGT Nexus.
http://en.wikipedia.org/wiki/Point_of_salehttp://en.wikipedia.org/wiki/Point_of_salehttp://en.wikipedia.org/wiki/Point_of_salehttp://en.wikipedia.org/wiki/Financial_transactionhttp://en.wikipedia.org/wiki/Financial_transactionhttp://en.wikipedia.org/wiki/Financial_transactionhttp://en.wikipedia.org/wiki/Taxhttp://en.wikipedia.org/wiki/Taxhttp://en.wikipedia.org/wiki/Taxhttp://en.wikipedia.org/wiki/Discounts_and_allowanceshttp://en.wikipedia.org/wiki/Discounts_and_allowanceshttp://en.wikipedia.org/wiki/Discounts_and_allowanceshttp://en.wikipedia.org/wiki/Paymenthttp://en.wikipedia.org/wiki/Paymenthttp://en.wikipedia.org/wiki/Paymenthttp://en.wikipedia.org/wiki/Warrantyhttp://en.wikipedia.org/wiki/Warrantyhttp://en.wikipedia.org/wiki/Warrantyhttp://en.wikipedia.org/wiki/Couponshttp://en.wikipedia.org/wiki/Couponshttp://en.wikipedia.org/wiki/Couponshttp://en.wikipedia.org/wiki/Receipt#cite_note-2http://en.wikipedia.org/wiki/Receipt#cite_note-2http://en.wikipedia.org/wiki/Receipt#cite_note-2http://en.wikipedia.org/wiki/IRShttp://en.wikipedia.org/wiki/IRShttp://en.wikipedia.org/wiki/Tradehttp://en.wikipedia.org/wiki/Tradehttp://en.wikipedia.org/wiki/Buyerhttp://en.wikipedia.org/wiki/Buyerhttp://en.wikipedia.org/wiki/Buyerhttp://en.wikipedia.org/wiki/Vendor_%28supply_chain%29http://en.wikipedia.org/wiki/Vendor_%28supply_chain%29http://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Purchase_order#cite_note-1http://en.wikipedia.org/wiki/Purchase_order#cite_note-1http://en.wikipedia.org/wiki/Purchase_order#cite_note-1http://en.wikipedia.org/wiki/Order_to_cashhttp://en.wikipedia.org/wiki/Order_to_cashhttp://en.wikipedia.org/wiki/Order_to_cashhttp://en.wikipedia.org/wiki/ERP_systemhttp://en.wikipedia.org/wiki/ERP_systemhttp://en.wikipedia.org/wiki/ERP_systemhttp://en.wikipedia.org/wiki/TradeCardhttp://en.wikipedia.org/wiki/TradeCardhttp://en.wikipedia.org/wiki/TradeCardhttp://en.wikipedia.org/wiki/GT_Nexushttp://en.wikipedia.org/wiki/GT_Nexushttp://en.wikipedia.org/wiki/GT_Nexushttp://en.wikipedia.org/wiki/GT_Nexushttp://en.wikipedia.org/wiki/TradeCardhttp://en.wikipedia.org/wiki/ERP_systemhttp://en.wikipedia.org/wiki/Order_to_cashhttp://en.wikipedia.org/wiki/Purchase_order#cite_note-1http://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Vendor_%28supply_chain%29http://en.wikipedia.org/wiki/Buyerhttp://en.wikipedia.org/wiki/Tradehttp://en.wikipedia.org/wiki/IRShttp://en.wikipedia.org/wiki/Receipt#cite_note-2http://en.wikipedia.org/wiki/Couponshttp://en.wikipedia.org/wiki/Warrantyhttp://en.wikipedia.org/wiki/Paymenthttp://en.wikipedia.org/wiki/Discounts_and_allowanceshttp://en.wikipedia.org/wiki/Taxhttp://en.wikipedia.org/wiki/Financial_transactionhttp://en.wikipedia.org/wiki/Point_of_sale


6/12

BANKING DOCUMENTS

Deposits or pay-in-slip

Cheques

Demand drafts

Debit and credit note

Vouchers

DEPOSITS AND WITHDRAWALS SLIP:

The deposits are made by filling up a pay-in-slip. The form of the pay-in-slip is:

It is used to deposit money in the bank and returned to the depositor.

It has the signature of the cashier, as receipt.

It gives the details regarding the date, the amount deposited.

CHEQUES

A cheque is an unconditional order on the bank made by the client instructing the bank to pay a

certain sum of money to the person named in the cheque or his order or the bearer. This

instrument is very safe and convenient method of making payments or withdrawing money from a

bank.


7/12

TYPES OF CHEQUES

1.OPEN CHEQUE

2.CROSSED CHEQUE

OPEN CHEQUE:

An open cheque is one which is payable across the counter of the bank. It need not be paid

through a bank. It can be encashed at the counter of the bank. An open cheque can further be of

two types:

a. BEARER CHEQUE:

When a cheque is payable to a person named in the cheque or to the bearer thereof, it is called a

bearer cheque.

For e.g.

pay to Rakesh Kumar Garg or bearer.

Such a cheque may be paid to Rakesh Kumar Garg at the counter of the bank when he presents it

for payment. Mr. Rakesh Kumar Garg can either himself go to bank for getting payment or simply

he may or may not sign at the back side of the cheque and hand it over to any person. Any person

can go to the bank and collect its payment. The drawee bank need not take any pains to get the

identification of the person to whom the payment to whom the payment is being made. A bearercheque is transferable merely by delivery.

b. ORDER CHEQUE:

An order cheque is payable to the person named in the cheque or his order.

For e.g.

pay to Rakesh Kumar Garg or order.

Such a cheque is payable to either Rakesh Kumar Garg or to any person whom he orders the

payment of the cheque. Order cheque is paid by the bank only when the bank is satisfied about

the identity of the payee. An order cheque is not transferable merely by delivery. It cannot be

transferred without the signatures of the transferor.


8/12

CROSSED CHEQUE:

A crossed cheque is one on which two parallel transverse lines with or without the word & co.

not negotiableetc. are drawn. A crossed cheque is not payable across the counter of the bank.

It must be collected through a bank. It is paid into the bank account of a person and cannot be

encashed at the counter of the bank. By crossing cheques safety is ensured and the person to

whom payment is eventually made can be traced because such a cheque is always paid into a bank

account. A crossed cheque provides protection not only to the holder of the cheque but also to thereceiving and collecting bankers.

Types of Crossing

a) General Crossing

b) Special Crossing

Other Types of Crossing

1. Restrictive Crossing

2. Not Negotiable Crossing

3. Double Crossing

Passbook:


9/12

A bank statement is a summary of all financial transactions occurring over a given period of time on a

deposit account.

A passbook is a paper book used to record transaction on a deposit account.

If the deposit account has no passbook such as a checkable account or credit card account, the bank

will issue statement for you in a given time period.If the deposit has a passbook, the book is

statement.

BANK DRAFT:


10/12

Bank draft is a bill drawn either on demand or otherwise by one banker on another in favour of a

third party or by one branch of a bank on another branch of the same bank or by the head office

of a branch or vice versa for a sum of money payable on demand or order. It is also known as

demand drafts as they are always payable on demand without any days of grace and there cannot

be any bearer drafts.

They are always used as a mode of remittance by parties for sending money from one place to

another. For the preparation of this draft bank charges a nominal commission for this service.

Demand Draft:

DIFFERENCE BETWEEN CHEQUE AND DEMAND DRAFT

DEMAND DRAFT It cannot be

made payable to

bearer.

Its payment

cannot be

stopped.

It is drawn

by a bank upon

itself.

CHEQUE It may be drawn

payable to bearer.

It is

countermanded asin case of a

cheque.

A cheque is drawn

by one person upon

another


11/12

DEBIT NOTE

It is a document evidencing that a debit to be raised against a party for other reasons, for e.g.,

when goods are returned to a supplier or when an additional amount is recoverable from acustomer.

CREDIT NOTE

It is made out when a party is to be given a credit except against the bill already received from it.

When goods are received back from a customer, a proper credit note should be given to him.

VOUCHER

It is a document providing evidence of some business transaction. It is clear from the above

definition that whenever a transaction takes place, an evidence to that effect is also established

Types of vouchers:

a. Source vouchers

b. Accounting vouchers

CHEQUE CROSSING

MEANING

The act of drawing two parallel transverse lines on the face of a cheque is called crossing of a

cheque. It is a direction to the banker not to pay the cheque across the counter of the bank but to

pay to a bank only or to particular bank in account with the bank.

The amount in this cheque is paid into the bank account of the respective person whose name is

being mentioned on the cheque.

Types of crossing:

a) General crossing

b) Specific crossing

GENERAL CROSSING

General crossing implies simply putting two parallel transverse lines on the face of cheque.

According to section 123 of the negotiable instruments act, 1881 says, where a cheque bears

across its face an addition of the words and company, or any abbreviation thereof; between two


12/12

parallel lines or just two lines without any negotiation will be considered a generally crossed

cheque.The effect of general crossing is that payment of such a cheque cannot be obtained at the

counter of the bank, it can only be obtained through a banker.

SPECIAL CROSSING

A special crossing implies a direction written on the face of a cheque to pay the cheque only if it is

presented through a particular bank mentioned therein. the cheque is deemed to be crossed

specially. In this the amount is transferred to the mentioned name a/c.

RESTRICTIVE CROSSING:

It constitute a direction to the collecting banker to collect the cheque and credit the proceeds to the

account of the payee only. Such a crossing is known as RESTRICTIVE CROSSING. The collecting bank

has to credit the account of the payee in whose favour the cheque is drawn.

NOT NEGOTIABLE CROSSING:

It makes the cheque non transferable but the effect of such a crossing is that when the holder to a

cheque transfers it to any other person the transferee does not get a better title than the transferor

had even though the transferee is a bonafide person who takes the instrument for a valid

consideration and before the maturity of the instrument.

DOUBLE CROSSING:

PERSONS WHO MAY CROSS A CHEQUE:

A cheque may be crossed by any of the following:

1. The drawee of the cheque

2. The holder of the cheque

3. The collecting banker