State BPA Fundamental Accounting Practice Exam

The endorsement transferring ownership of a check is the ________ endorsement?

1. Restrictive

2. Special

3. Blank

4. General

The correct answer is: Special

The endorsement that transfers ownership of a check is known as a special endorsement. This type of endorsement specifies the person to whom the check is being transferred. When a check is endorsed in this manner, the original payee’s name is written on the back along with the phrase "pay to the order of" followed by the name of the new payee. This clearly indicates that ownership of the check is being passed from one party to another, allowing the new payee to then deposit or cash the check. In contrast, a restrictive endorsement typically limits the use of the check, such as indicating that it is for deposit only. A blank endorsement simply involves the signature of the payee without specifying a new payee, which allows anyone in possession of the check to cash it. General endorsement is not a recognized term in this context and does not refer specifically to any form of endorsement used in transferring ownership of a check. Thus, the special endorsement is the correct choice for transferring ownership.