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What is Legal Tender - Teachoo.JPG

What is legal Tender?

It is a form of money which cannot be refused by any citizen for settlement of any kind of transaction

Example-

If I have to pay a shopkeeper Rs 500, I can give him any currency note or coin as payment

The person cannot refuse to take any type of currency note

Hence, coins and currency notes are legal tenders

Exception

However, that person can refuse to take cheque of 500 or Fixed deposit of 500, as these are not legal tenders

 

Which type of Money are Legal Tenders and Which are not legal Tenders

Different Types of Money - Teachoo.JPG

Concept of Limited Legal Tenders

Legal Tender - Teachoo.JPG

 

NCERT Questions

No questions in this part

 

Other Books

Question 1

In the following questions, select the correct answers:

1 ____ are termed as Legal Tender Money.

  1. Demand Deposits
  2. Time Deposits
  3. Inter-bank Deposits
  4. Currency notes
View Answer

Question 2

Currency means:

  1. Currency Notes
  2. Coins
  3. Both A and B
  4. None of these
View Answer

Question 3

In India, paper notes are:

  1. Limited Legal Tender
  2. Unlimited Legal Tender
  3. Both A and B
  4. None of these
View Answer

Oswaal Questions

Question 2

Which of the following statements is false?

  1. Demand deposits are not legal tender.
  2. Currency notes issued are not legal tender.
  3. Term deposits are not legal tender.
  4. Wheat is not legal tender.
View Answer

Question 3

Which of the following statements is true?

  1. All financial institutions are banking institutions.
  2. RBI has the complete authority to issue currency notes.
  3. The government of India issues currency notes.
  4. Banking institutions issue currency notes.
View Answer

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Transcript

What is Legal Tender Example Suppose you go to Mc Donald's to purchase a Mc Veggie Burger for Rs 70 Can you make payment by 7 Bank Notes of Rs 10? Can you make payment by 70 Coins of Rs 1 each Can you make payment by Cheque of Rs 70 ? Can you make payment by FD of Rs 70? What is Legal Tender? It is a form of money which cannot be refused by any citizen for settlement of any kind of transaction Yes, shopkeeper has to accept Bank Notes Yes, shopkeeper has to accept coins No, shopkeeper may refuse to take cheque No, shopkeeper may refuse to take FD What is Legal Tender? It is a form of money which cannot be refused by any citizen for settlement of any kind of transaction Different Types of Money Legal Tender Not Legal Tender Cant be Refused by Any citizen in settlement of any transaction Can be Refused by Any citizen in settlement of any transaction Example Example Currency Notes Coins Fixed Deposit Demand Deposit Note Legal Tender is also of 2 Types Limited legal Tender Unlimited Legal Tender Suppose I want to Purchase a Car for Rs 10 lacs Can I make Payment of Rs 10 lacs by Coins Legal Tender Limited Legal Tender Unlimited Legal Tender Payment upto a Certain Amount is allowed Payment upto any amount is allowed Example Coins can be used to make Payment only upto Rs 1000 in IndiaExample Currency Notes can be used to make Payment up to any amount In India

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 12 years and a teacher from the past 16 years. He teaches Science, Economics, Accounting and English at Teachoo