What is it called when a check is sent to another depository institution for collection?

What is it called when a check is sent to another depository institution for collection?

• A. Transit check
• B. Clearing check
• C. Collection check
• D. Deposited check

Answer: (A)

The term used when a check is sent to another depository institution for collection is known as a transit check. A transit check generally refers to a check that is in the process of being processed or collected by a financial institution other than the one on which it was originally drawn. This term emphasizes the transactional nature of the check as it moves through the clearing system prior to being presented for payment. In the context of the various options, "clearing check" and "collection check" can be used in certain discussions but do not specifically define the process of sending a check to another institution for collection. "Deposited check" typically refers to a check that has been deposited by the payee into their own account, which does not encapsulate the aspect of the check being sent to another institution for further action. Thus, transit check is the most accurate terminology for this scenario.

The term used when a check is sent to another depository institution for collection is known as a transit check. A transit check generally refers to a check that is in the process of being processed or collected by a financial institution other than the one on which it was originally drawn. This term emphasizes the transactional nature of the check as it moves through the clearing system prior to being presented for payment.

In the context of the various options, "clearing check" and "collection check" can be used in certain discussions but do not specifically define the process of sending a check to another institution for collection. "Deposited check" typically refers to a check that has been deposited by the payee into their own account, which does not encapsulate the aspect of the check being sent to another institution for further action. Thus, transit check is the most accurate terminology for this scenario.