Kinds of Indorsement.—An indorsement is usually for the purpose of transferring title. There are several kinds of indorsement, as follows:
1. A blank indorsement, which consists only of the payee’s signature; this renders the instrument payable to bearer.
2. A full indorsement, which reads as follows: “Pay to the order of . . . . . . . . .,” giving the name of the indorsee, i.e., the person to whom the instrument is transferred, and followed by the signature of the indorser, who before his indorsement was the payee.
3. A qualified indorsement, which is either a blank or full indorsement with the words “without recourse” added to it. This kind of indorsement transfers title with no liability attaching to the transferor in case of non-payment by the maker at maturity.
4. A restrictive indorsement, giving the name of the party to whom the check is transferred, the words “for collection” or “for collection and deposit” being added and followed by the signature. This indorsement does not transfer title but merely appoints the person or bank named as agent for the purpose of collection.
CHAPTER XXII
BUSINESS PAPERS—THE GOODS INVOICE
AND BILL OF LADING
Definition.—When a business transaction takes place, a record or memorandum of its amount and nature is usually made out. Thus, the amount of cash received for a sale may be rung up on the cash register or a sales clerk may make out a duplicate sales ticket and turn over the carbon copy as a sales memorandum to the bookkeeper; for cash disbursed a receipt, to be the basis for formal entry on the books, may be demanded from the person to whom the payment is made.
These memoranda of business transactions are called “business papers.” They comprise all of the more or less formal and informal documents which constitute the firsthand evidence of most transactions. Among the most common business papers may be mentioned: the goods invoice for purchases or sales; negotiable paper, including the check, note, draft, money order, and warehouse receipt; the statement and account sales; the shipping order and bill of lading; the bill of sale; the lease agreement; and contracts of all sorts. A few of the business papers most frequently used will be explained.
The Invoice.—When a merchant sells goods to a customer he writes out an itemized “bill” which is sent along with the goods. This bill, loosely called an “invoice,” is from the seller’s viewpoint more accurately described as a sales invoice, and from the customer’s or buyer’s viewpoint as a purchase invoice. It is an itemized statement of goods bought or sold, and should state the names of vendor and vendee, the address of the vendor and the date of sale, the quantities, kinds, and prices of the goods, the terms of sale, and additional information as to method of shipment, etc.
Handling the Purchase Invoice.—When goods are bought the purchase invoice should be verified or audited. The method of audit depends upon the organization of the business. In a small business, if the invoice is received before arrival of the goods, it is usually held till their arrival and then checked against them as to quantities, quality, and price. The extensions and total are verified and entry made in the purchase journal, using the audited invoice as a basis. The invoice should then be placed in a temporary file till paid, after which it is usually filed under the vendor’s name for future reference. The check in payment of the invoice, when returned canceled by the bank, is frequently attached to the invoice for which it was issued as evidence of its settlement. At any rate the paid invoice should bear on its face a notation to show the payment.