List and briefly explain the functions of a negotiable instrument

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Negotiable instruments serve the following functions:
1. Substitute for money. Merchants and consumers often do not carry cash for fear of loss or theft. Thus, certain forms of negotiable instruments—such as checks—serve as substitutes for money.
2. Act as credit devices. Some forms of negotiable instruments extend credit from one party to another. A seller may sell goods to a customer on a customer's promise to pay for the goods at a future time, or a bank may lend money to a buyer who signs a note promising to repay the money.
3. Act as record-keeping devices. Negotiable instruments often serve as record-keeping devices. Banks may return canceled checks to checking account customers each month or allow customers to view them online. These act as a record-keeping device for the preparation of financial statements, tax returns, and the like.