What is a written order that requires payment of a specific sum of money to the bearer called?

What is a written order that requires payment of a specific sum of money to the bearer called?

• A. Receipt
• B. Draft
• C. Note
• D. Promissory note

Answer: (B)

The correct answer is a draft, which is a written order requiring payment of a specific sum of money to the bearer. In financial terms, a draft is a formal instrument that directs one party to pay a designated sum to another. It is important in transactions because it serves as a negotiable instrument, meaning it can be transferred to others, similar to a check. While a receipt acknowledges that a payment has been made, it does not function as an order for future payment. A note generally refers to a promise to pay but is typically more informal and might not specify the details of payment as a draft would. A promissory note is specifically a written promise to pay a certain amount at a future date, which is a different concept from a draft that serves as an order for immediate payment. Understanding the distinction between these financial terms helps in grasping the mechanics of money movement in various transactions.

The correct answer is a draft, which is a written order requiring payment of a specific sum of money to the bearer. In financial terms, a draft is a formal instrument that directs one party to pay a designated sum to another. It is important in transactions because it serves as a negotiable instrument, meaning it can be transferred to others, similar to a check.

While a receipt acknowledges that a payment has been made, it does not function as an order for future payment. A note generally refers to a promise to pay but is typically more informal and might not specify the details of payment as a draft would. A promissory note is specifically a written promise to pay a certain amount at a future date, which is a different concept from a draft that serves as an order for immediate payment. Understanding the distinction between these financial terms helps in grasping the mechanics of money movement in various transactions.