Definition
A crossed cheque is a type of cheque that has two parallel lines drawn across the upper left-hand corner or the entire face, with the purpose of specifying that the funds must be deposited directly into a bank account rather than being immediately cashed at the bank counter. This safety measure is generally used to reduce the possibility of fraud and ensure that payments go directly to the intended recipient’s bank account.
There are usually two types of crossings:
- General Crossed Cheque: Indicated by simply drawing two parallel lines. This form doesn’t specify any bank, meaning it can be deposited into any bank account.
- Special Crossed Cheque: Includes the name of a particular bank between the parallel lines, which means the cheque can only be deposited at the specified bank.
Examples
General Crossing Example: A cheque with “—-//—-” drawn across its face. This cheque can be deposited into any bank account.
Special Crossing Example: A cheque with “—-//Bank of America—-” drawn across its face. This cheque can only be deposited at a Bank of America account.
Frequently Asked Questions (FAQs)
What is the purpose of a crossed cheque?
The purpose of a crossed cheque is to reduce the risk of fraud by ensuring that the funds can only be deposited into a bank account rather than being cashed over the counter.
Can a crossed cheque be cashed?
No, a crossed cheque cannot be cashed directly over the counter; it must be deposited into a bank account.
How do you cross a cheque?
To cross a cheque, draw two parallel lines across the upper left-hand corner or the face of the cheque. For special crossing, add the name of the intended bank between the parallel lines.
Can a crossed cheque be deposited in any bank?
A generally crossed cheque can be deposited in any bank. However, a specially crossed cheque must be deposited into the bank which is specified in the crossing.
Are crossed cheques safer?
Yes, crossed cheques are considered safer as they reduce the risk of fraud and ensure that funds are deposited directly into the beneficiary’s bank account.
Related Terms
- Cheque: A written order directing a bank to pay a specific amount of money to the person named on the cheque or to the bearer.
- Bearer Cheque: A cheque that can be presented by anyone bearing it, without the need for further identification.
Online Resources
Suggested Books for Further Studies
- “Accounting: What the Numbers Mean” by Marshall, McManus, and Viele
- “Principles of Accounting” by Belverd E. Needles
- “Financial Accounting: Tools for Business Decision Making” by Paul D. Kimmel, Jerry J. Weygandt, and Donald E. Kieso
Accounting Basics: “Crossed Cheque” Fundamentals Quiz
Thank you for exploring the concept of the crossed cheque through this foundational knowledge. Continue to pursue excellence in your financial acumen!