In Nigeria, cheques are not money because________

Step 1: Analyze the question The question asks why a cheque is not regarded as money. We need to think about what makes something "money" and what a cheque actually is.

Step 2: Explain the concept Money is anything that is generally acceptable as a medium of exchange, a store of value, a unit of account, and a standard for deferred payment. In Nigeria, the notes and coins issued by the Central Bank of Nigeria (CBN) are legal tender, meaning the law compels creditors to accept them in settlement of debts.

A cheque is a written order to a bank to pay a stated sum from the drawer's account to the payee. It is a near-money or a credit instrument. It only transfers money from one account to another and is not money itself.

Step 3: Evaluate the options

• A. Most Nigerians cannot identify them. This is false and is not an economic reason.
• B. They are not legal tender. This is true. Cheques are not legal tender, because nobody is legally forced to accept them. However, this is a consequence of the real issue below.
• C. There are no banks in rural areas. This is irrelevant and inaccurate as a definition.
• D. They are not generally acceptable as a medium of exchange. This is the core defining quality of money. A cheque can be rejected because it may be dishonoured (bounced), and the receiver has to trust the drawer. So it lacks general acceptability.

Step 4: Identify the answer Both B and D are true statements, but the question asks for the reason a cheque is not money. The fundamental property of money is general acceptability. Legal tender status is just one way to secure that acceptability, and some things (such as bank deposits) are counted as money without being legal tender.

Tip: In exam questions on "what is money," look for the phrase "generally acceptable as a medium of exchange". It is the key defining feature and is usually the correct option. Remember: cheques = near money, naira notes and coins = legal tender.