The Heading, the Order to pay, the Amount Repeated in figures, the Signature, and the Number of the check are the parts of a check.
The Order is written beneath the heading and fills the line for the full length of the check, and usually occupies three lines. The name of the bank, printed in bold type, is on the first line; on the second are the printed words Pay to, which are followed by the name of the person to whom the payment is to be made, or the payee. On the third is written the amount to be paid, the number of dollars to be paid being indicated in script, and the number of cents, in figures as a fraction of a dollar. It is optional whether the word and be used between the dollars and the cents. The line generally ends with the printed word Dollars.
CORRECT FORM FOR CHECK
Begin with capitals the words Pay and Dollars, and all important words in the name of the bank, as well as all words expressing numbers, except such as may be connected with preceding words by the hyphen.
The Amount Repeated is in figures, the same in amount as mentioned in the order.
But it is sometimes written in the body of the order with the script statement and sometimes in the upper left-hand corner of the check on a line with the heading. It is placed in the lower left-hand corner on a line with the signature.
The cents are expressed fractionally, as in the body of the order.
Most business men number their checks in the order they are issued. The number is found in one of the corners which is not occupied by the value of the check written in figures.
Checks are principally of two kinds: Negotiable and Non-negotiable.
A Negotiable Check is one that may be transferred from one person to another, and a Non-negotiable Check is one that cannot be so transferred.
In drawing a negotiable check the order may be in one of the following forms : Pay to Bearer; Pay to the order of So-and-so; Pay to So-and-so or order. The first makes the money payable to any one that may present the check. The second or third makes the money payable to any person to whom the payee may order it paid.
When the word Bearer is used, the check is negotiable as it stands ; but when the word order is used, the payee can neither collect the money himself nor transfer the check to another without writing his name upon the back. This is called indorsing the check. When the payee writes his name only, he is said to indorse the check in blank. By this indorsement he makes the money payable to bearer, and the check is still negotiable. When the payee wishes the money paid to a particular person only, he writes on the back Pay to So-and-so, and signs his name beneath. With such an indorsement the check is no longer negotiable. But when the payee wishes to transfer the check to another, so that it can be transferred to still another, he writes on the back Pay to the order of So-and-so, or, Pay to So-and-so or order, and signs his own name beneath this. The check is now also negotiable. This may be repeated by the second person and so on, by indorsing it under the other indorsements. The Holder is the person who is in legal possession of a check.
The Check Stub and Check showing how record is kept in check book
For indorsement, first turn the check so as to bring the left end to the top, and then turn it face downwards and write the indorsement near the top. Each successive indorsement should be written under its predecessor.
Checks are usually bound in books. At the left of each check so bound, and on the same piece of paper, is a ruled form for a complete description of the check. Between the check and this ruled form there is a line of perforations by means of which the check can be torn off for use. The paper that remains behind is called the stub.
Before depositing the checks they must first be indorsed. The customary form of indorsement is to write or stamp across the back of the check and about one inch from the top:
For Deposit to Credit of Herbert Smith
For Deposit Only
In Hanover National Bank
For Credit of
The left end of the face of the check is the top of the back. Any person named for the purpose may sign an indorsement for deposit. Checks thus indorsed can only be deposited, and should they be lost on the way to the bank the finder cannot use them, because as stated the checks are to be deposited, and the bank is not authorized to pay them to any one.
If the holder receives a check in which his name is incorrectly written, he must first indorse the name as it is written and under that write his own name correctly. When the deposit slip has been made out, it is well to keep a copy upon the reverse side of the stub of the check book. The checks, money, deposit slip and pass book are then taken to the receiving teller, who examines the deposit slip to see that it is correct and enters the amount in the pass book. This entry is his receipt for the amount deposited.
It is of the highest importance that the depositor keep his check book correctly and punctually written up. It is his guide to his bank account and he should be able to tell at once exactly how much money he has in bank at any given time.