Question

accounpayae

Answer 1

(A)

What is an Account Payee Cheque?

Ans: An Account Payee Cheque is a highly secured type of cheque as the amount can only be deposited in the account of the payee. The payee cannot endorse this cheque to anyone else. To understand the concept better, one must understand the difference between a drawer, drawee and payee.

A drawer is the party that writes and signs the cheque- usually it is the person who holds the account from which the money will be deducted or is an authorised signatory for that account.

Drawee is the party upon whom the drawer writes the cheque. Drawee is usually the bank and the drawer orders the bank to draw the amount.

Payee is the party to whom the final payment is made and his/her/its name is written on the cheque.

So, in case of an account payee cheque, the payment will be made only by depositing it to the payee’s account.

How is an Account Payee Cheque different Bearer Cheque, Order Cheque and Crossed Cheque?

Ans:

Crossed Cheque– A crossed cheque is the one the proceeds of which can only be deposited into the payee’s account. However, such cheques can be endorsed by the payee to a third party; the next person can further endorse it to someone else. Such endorsement can be done by writing the name of the endorsee on the cheque and signing on the back of the cheque leaf.

Bearer Cheque- Every cheque is a bearer cheque unless the word bearer on it is crossed or any other type of crossing is done on it. Such cheques can be encashed over the counter by the person who holds it. This type of cheque is highly unsecure and can be misused when lost. Moreover, these cheques do not require any endorsing and can be easily handed over to a third party.

Order Cheque- When the word ‘Bearer’ is crossed from the cheque and ‘to Order’ is written on it, it is known as an order cheque. This type of cheque has features similar to that of a bearer cheque; however it cannot be endorsed merely by handing it over to someone else. It should be properly signed and endorsed in order to be valid.

Hence, an account payee cheque is different from crossed cheque and order check in terms of endorsement and it is completely opposite of a bearer check. While bearer check is the most vulnerable to misuse, an account payee cheque is a highly secured instrument.

It is extremely important to know the different ways of crossing a cheque in order to serve the right purpose-

• Two crosses on the top left corner- Crossed Cheque
• Two crosses with “Account Payee” written on it- Account Payee Cheque
• Two crosses with “Not Negotiable” written on it- Non-negotiable Cheque

(B) What is Accounts Payable (AP) ?

Ans:

Accounts payable (AP) is an account within the general ledger that represents a company's obligation to pay off a short-term debt to its creditors or suppliers. Another common usage of "AP" refers to the business department or division that is responsible for making payments owed by the company to suppliers and other creditors.

A company's total accounts payable (AP) balance at a specific point in time appears on its balance sheet under the current liabilities section. Accounts payable are debts that must be paid off within a given period to avoid default.

Accounts payable (AP) is an important figure in a company's balance sheet. If AP increases over a prior period, that means the company is buying more goods or services on credit, rather than paying cash. If a company's AP decreases, it means the company is paying on its prior period debts at a faster rate than it is purchasing new items on credit. Accounts payable management is critical in managing a business's cash flow.

Accounts Payable vs Trade Receivable

Ans: Trade payables constitute the money a company owes its vendors for inventory-related goods, such as business supplies or materials that are part of the inventory.

Accounts payable include all of the company's short-term debts or obligations.

conclusion: your given data is incomplete but i tried best to answer it, using my knowledge and experience

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