Final answer:
Endorsing a check allows the transfer of the right to cash it to another party. Checks operate as credit transactions, facilitating payments without physical money exchange. Bills of exchange enable secure and convenient fund transfers.
Explanation:
Endorsing a check allows the transfer of the right to cash it to another party. This process is similar to endorsements used on bank checks, where the payee can direct the payer to make payment to a third party by endorsing the check on the back with a statement like, 'Pay to (Name of third party)'.
Checks are a form of credit transactions as they facilitate payments without the physical exchange of money. When making payments by checks, the amount is transferred in the banker's books from the payer's account to the receiver's account without the need for cash.
Bills of exchange serve as transferable orders from a creditor to a debtor, and when accepted, they become an acknowledgment of debt. This mechanism allows for secure and convenient transfers of funds between parties.
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