Question

State and explain five means of payment in hometrade

Answer 1

1. Cash payment
   • This is where payment for goods and services is made using notes and coins.
2. Cheque
   • A cheque is a written order by the account holder to his bank to pay on demand a specified amount of money to the named person or to the bearer.
3. Bill of exchange
   • This is an unconditional order, made in writing, addressed by one person to another, requiring the person to whom it is addressed to pay on demand, or at a stated future date, the sum of money indicated on the bill to a named person or to the bearer.
4. Promissory note
   • This is a document whereby one person promises to pay another person a specified sum of money at a certain stated date.
5. Money order
   • This is a document which is sold by the post office for the purpose of remitting money
6. Postal order
   • Postal orders are documents which are sold by the post office in fixed denominations such as Ksh 50, Ksh100 and Ksh 500 and are used to remit or make payments for small amounts
7. Postage stamps
   • This is means of payment that is used to make payments for small amounts of money
8. Premium bonds
   • This is a means of payment which is offered by the post office
9. Banker’s cheque (bank draft)
   •  This a cheque which is drawn by the bank on itself
10. Credit cards
    • These are cards which are issued by some major banks and other credit card companies to enable the holder of the card to buy goods or services from business organisations which accept the cards without paying for them on the spot

Answer 2

Cheque
Cash