Office Administrative Assistant Practice Exam

Which type of endorsement on a check specifies to whom the check is payable?

1. Blank

2. Special

3. Conditional

4. Bearer

The correct answer is: Special

The special endorsement on a check is significant because it clearly indicates to whom the check is payable. When a check is endorsed as a special endorsement, the original payee writes "Pay to the order of" followed by the name of the new payee. This type of endorsement is particularly important when transferring the right to receive the funds to another individual or entity, as it legally assigns the check to the specified person. This ensures that only the designated payee can cash or deposit the check, providing a layer of security in check transactions. Special endorsements are thus essential in situations where the original payee wishes to transfer their rights and make sure that the funds are directed to a specific individual or organization.