What defines a certified check?

What defines a certified check?

• A. A check guaranteed by a third-party bank
• B. A check written on the bank's own funds
• C. A personal check that has been endorsed
• D. A bank draft that requires prior approval

Answer: (B)

A certified check is defined as a check that is drawn from the bank's own funds and is guaranteed by the bank. When a check is certified, the bank verifies that the signature on the check is legitimate and that the account has sufficient funds to cover the amount. By certifying the check, the bank essentially reserves the funds for the payee, ensuring that the payment will be honored. This distinction is crucial, as it provides an additional level of security for the payee, who can be confident that they will receive the funds when the check is presented for payment. This characteristic sets certified checks apart from other types of checks, such as personal checks, which may not have the same guarantee of funds, and marks them as a reliable form of payment in various transactions.

A certified check is defined as a check that is drawn from the bank's own funds and is guaranteed by the bank. When a check is certified, the bank verifies that the signature on the check is legitimate and that the account has sufficient funds to cover the amount. By certifying the check, the bank essentially reserves the funds for the payee, ensuring that the payment will be honored.

This distinction is crucial, as it provides an additional level of security for the payee, who can be confident that they will receive the funds when the check is presented for payment. This characteristic sets certified checks apart from other types of checks, such as personal checks, which may not have the same guarantee of funds, and marks them as a reliable form of payment in various transactions.