Class 11 Finance Important Chapter 14 Crossing Cheque

Class 11 Finance Important Chapter 14 Crossing Cheque Solutions English Medium As Per AHSEC New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 11 Finance Important Solutions and select need one. AHSEC Class 11 Finance Additional Notes English Medium Download PDF. HS 1st Year Finance Important Solutions in English.

Class 11 Finance Important Chapter 14 Crossing Cheque

Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. ASSEB Class 11 Banking Additional Question Answer are part of All Subject Solutions. Here we have given HS 1st Year Banking Important Notes in English for All Chapters, You can practice these here.

Crossing Cheque

Chapter: 14

IMPORTANT QUESTION AND ANSWER

Answer the Following Questions:

1. What is crossing of a cheque?

Ans: Crossing of a cheque is a direction by the drawer that the cheque amount must be paid only through a bank and not over the counter, typically indicated by two parallel lines on the cheque.

2. Who can cross a cheque?

Ans: The drawer of the cheque can cross it at the time of issuing the cheque.

3. What is the difference between general and special crossing?

Ans: General crossing has only two parallel lines without a bank name, while special crossing includes the name of a specific banker.

4. What does ‘Not Negotiable’ crossing mean?

Ans: It means the cheque can be transferred but the transferee cannot get a better title than the transferor, thus reducing risks of stolen cheques.

5. What is ‘account payee’ crossing?

Ans: A cheque crossed with the words ‘A/c Payee’ means the amount should be credited only to the account of the payee.

6. What is endorsement?

Ans: Endorsement is the signature or instruction on the back of a negotiable instrument that transfers ownership or specifies payment instructions.

7. What are the essentials of a valid endorsement?

Ans: It must be on the instrument, done by the holder, signed by the endorser, cover the full amount, and followed by delivery.

8. What is a restrictive endorsement?

Ans: It is an endorsement that restricts further negotiation or transfer of the instrument.

9. Explain the different types of cheque crossing and their significance.

Ans: Cheque crossing is a safety feature added to cheques to ensure that the payment is made only through a bank account. It reduces the risk of misuse and ensures the cheque reaches the rightful recipient. 

There are five main types of crossing:

(i) General Crossing: It includes two parallel transverse lines, with or without words like “& Co.” or “Not Negotiable.” It indicates that the cheque must be deposited in a bank account and not encashed over the counter.

(ii) Special Crossing: In this case, the cheque bears the name of a specific bank across its face. Only the mentioned bank can collect the amount on behalf of the payee. It offers greater security than general crossing.

(iii) Account Payee Crossing: This includes the words “A/c Payee” or “Account Payee Only” on the cheque. It ensures the cheque amount is credited only to the account of the named payee, preventing further negotiation.

(iv) Not Negotiable Crossing: This phrase limits the transferability of the cheque. While the cheque can still be transferred, the transferee cannot have a better title than the transferor, thus reducing fraud.

(v) Double Crossing: A cheque that is specially crossed to one banker may be further crossed specially to another banker, who acts as the agent for collection. However, multiple crossings are restricted under Section 125 of the Negotiable Instruments Act.

These types of crossings help secure cheque transactions and protect against fraud or unauthorized encashment.

10. What are the various kinds of endorsement, and how do they affect the negotiability of a cheque?

Ans: Endorsement is a method by which the holder of a negotiable instrument, such as a cheque, signs it for the purpose of transferring it to another person. 

There are several kinds of endorsement, each affecting the negotiability of the instrument differently:

(i) Blank or General Endorsement: The endorser signs the cheque without naming an endorsee. It converts an order cheque into a bearer cheque, making it freely transferable.

(ii) Special or Full Endorsement: The endorser specifies the person to whom the cheque is payable. This retains the cheque’s order status and transfers ownership.

(iii) Restrictive Endorsement: It restricts further negotiation of the cheque. For example, “Pay to Amit only.” This means only Amit can encash it, and no further transfer is allowed.

(iv) Conditional Endorsement: The endorser attaches a condition to the endorsement. Payment is made only when the specified condition is fulfilled, such as “Pay to Rahul on delivery of goods.”

(v) Sans Recourse Endorsement: The endorser limits their liability by stating that they shall not be held liable in case the cheque is dishonoured.

(vi) Partial Endorsement: It refers to endorsement of only part of the cheque amount, such as “Pay Rs. 500 to Ravi.” This type of endorsement is invalid under the law.

Each type of endorsement changes how and to whom the cheque can be transferred or encashed, and whether or not the liability and rights are passed on to the endorsee.