DECA+ Business Management and Administration Practice Exam

What is the primary function of a general endorsement?

1. To authorize payment to any bearer of the check

2. To change the name on the check

3. To donate the check amount to a charity

4. To place a stop payment on the check

The correct answer is: To authorize payment to any bearer of the check

The primary function of a general endorsement is to authorize payment to any bearer of the check. This means that when a check is endorsed generally, it can be cashed or deposited by anyone who possesses it, not just the original payee. This type of endorsement is done by signing the back of the check without any additional restrictions or limitations. In contrast, other options don't reflect the main purpose of a general endorsement. Changing the name on the check involves a different type of endorsement, which typically requires more formalities and may include restrictive instructions. Donating the check amount to a charity is not a function of a general endorsement, as that would involve transferring the funds and usually requires specific endorsement or instructions. Placing a stop payment on the check relates to halting a check from being cashed or deposited and does not involve endorsement practices at all. Understanding general endorsements is crucial for anyone working with checks, as it affects how checks can be transferred and who can legally cash them.