Kinds of Credit Investment

Open Book Account

Promissory note
Trade Acceptance
Bank deposit
Savings deposit
Time deposit
Demand deposit
Classification of credit instruments
General Acceptability
Limited Acceptability
Investment Purposes
Stock Certificate - ownership evidence
Bond Certificate - evidence of indebtedness
Money Market Bills - bought and sold
Commercial purposes
Promise to pay investment
promissory notes
financial institution deposits
letter of credit (commercial traveler)
Open book accounts
Adv. of promissory notes
Evidence of credit transactions
can be sold to a higher price
can be discounted
obliged to pay
Promise to pay - maker and comaker
Orders to pay - three parties
drawer - depositor
drawee - bank
payee - receiver
Check - is a written order, commonly used bills
commercial, personal, certified

Orders to pay - second type of commercial credit

instrument
Types of Checks
Crossed checks - two parallel lines
Post dated checks - future date
State check - not encashed
Managers, Cashiers, Treasurers Check - against the
funds
Boincing or Rubber Check
Falsified check - deliberately imitated to deceive
Traveler Check - common credit unversal
acceptability
Personal Check - defraying individual or personal
expenses
Cancelled Check - cancelled
Returned Check - returned
Adv of Checks
easy and safe mean of paying
easily negotiated
convenient to use for large payments
drawers can put a stop payment incase of robbery,
theft
forged checks paid by the bank would be a
responsibility of the bank rather than the depositor
cancelled checks serve as receipts for payments
made
Disadv of Checks
They are not readily accepted for payment
Drawers have to carefully keep track of their
deposits
Carelessness may result in loss of checks and
thereby enable another to forge the lost check
most of the swindling cases were done because of
checks