UK Accounting Glossary
In law, legal tender is a payment that by statute must be accepted in payment of a debt. In the US, federal law declares that all US currency coins and notes are legal tender. Even the $1,000 note, which has been withdrawn from circulation for many years, is still considered legal tender. The meaning of legal tender is sometimes misunderstood as obligating a merchant to accept payment in as a form of legal tender. However, a grocer may refuse payment for a pack of gum with a $100 bill, which is legal tender, and a jeweller could refuse to sell a gold ring for payment in pennies, also legal tender. Checks, charge cards, and other payment mechanisms are not legal tender.
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This glossary post was last updated: 10th February 2020.