Future Business Leaders of America (FBLA) Accounting Practice Test

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Prepare for the FBLA Accounting Test with practice quizzes and comprehensive questions. Each question is designed to help deepen your understanding and enhance your readiness for the exam. Are you ready to excel?

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What is the purpose of a restrictive endorsement?

To indicate that the check is invalid
To allow any person to cash the check
To limit further transfer of a check's ownership
To specify the amount of funds to be paid

The correct answer is: To limit further transfer of a check's ownership

A restrictive endorsement serves the specific purpose of limiting the further transfer of a check's ownership. When a check is endorsed restrictively, it typically includes a phrase such as "For deposit only" along with the payee's signature. This means that the check can only be deposited into the account of the payee and cannot be cashed or transferred to another individual. This restriction helps to enhance security by ensuring that the funds go directly to the intended recipient and protects against potential theft or fraud that can occur if a check is simply endorsed over to a third party. By specifying that the check can only be deposited rather than cashed, a restrictive endorsement safeguards the transaction, making it a preferred method for ensuring that funds are handled properly and securely. This characteristic distinguishes it from other types of endorsements that may allow for greater mobility of the check and its funds.