Question 1

Mark sold his car to Mary.Mary paid with a certified check.The check was made out for $18,000,the agreed price for the car.After they had exchanged paperwork and closed the deal on the car,Mark noticed that the bank had certified the check for $10,000 rather than the $18,000 amount of the check.Mark then altered the check to be for $28,000.How much must the bank pay on the check?

Accepted Answer

The bank is liable only for the amount f...

Question 2

Banks must credit all customers' deposits to their accounts on the same day that the deposits are received.

Accepted Answer

A) True 
 B)False

Question 3

The main reason that someone would use a cashier's check to make a payment rather than a check drawn on that person's own account is that:

Accepted Answer

A)   using a cashier's check will cost less
B)   the person will obtain a longer float time with the cashier's check
C)   payees are often more willing to accept a cashier's check
D)   cashier's checks can be indorsed to third partiesE) A) and D)
F) B) and C) C

Question 4

Which of the following describes a bank's duty to ensure that a drawer's signature is genuine?

Accepted Answer

A)   The bank is not under a duty to determine the authenticity of drawers' signatures.
B)   The bank has a duty to discover forgeries only if they are reasonably obvious.
C)   The bank has a duty to discover forgeries,and is liable if it pays an instrument on which the drawer's signature was forged.
D)   The bank has a duty to discover forgeries,but only if the drawer has given notice of the likelihood of a forgery,such as if the drawer has lost some blank checks.E) A) and B)
F) All of the above

Question 5

Barry writes a check to Larry,but before Barry delivers it to Larry,Barry loses it through his own negligence.He then calls his bank and orally places a stop-payment order.Ten days later,the bank pays the check,which was forged.Barry intended to send a follow-up,written stop-payment order,but forgot.Barry learns three weeks later that the check had been paid.In this situation:

Accepted Answer

A)   the bank must credit Barry's account because it did not follow a valid stop-payment order
B)   Barry suffers the loss because his negligence led to the forgery
C)   Barry suffers the loss because he never sent a written stop-payment order
D)   Barry suffers the loss,but the bank must try to recover from the forgerE) A) and B)
F) A) and C)

Question 6

As a holder,the payee of a check can either demand payment or indorse the check to another person.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is true of a stop-payment order issue to a bank?

Accepted Answer

A)   It is valid for 10 days if given orally.
B)   It is valid for 1 year if given in writing.
C)   A bank that pays a check in violation of a valid stop-payment order is liable to the drawer only if the drawer is damaged by this payment.
D)   A holder or indorser may stop payment on a check.E) B) and C)
F) C) and D)

Question 8

Checks that have more than one indorser have no validity.

Accepted Answer

A) True 
 B)False  False

Question 9

Bank deposits and collections are covered under Article 3 of the Uniform Commercial Code.

Accepted Answer

A) True 
 B)False

Question 10

The issuing bank serves as both the drawer and drawee of a cashier's check.

Accepted Answer

A) True 
 B)False

Question 11

The drawee is the customer who maintains the checking account.

Accepted Answer

A) True 
 B)False

Question 12

What type of relationship is created when a customer makes a deposit into her account at a bank?

Accepted Answer

A)   principal-agent
B)   trustee-beneficiary
C)   donor-donee
D)   creditor-debtorE) All of the above
F) A) and B)

Question 13

A principal-agent relationship is created between a customer and a bank:

Accepted Answer

A)   only if the customer deposits a check that the bank must collect for the customer
B)   any time the customer deposits an amount into the customer's checking account
C)   only when the customer writes a check against her account
D)   if the customer deposits a check that the bank must collect for the customer or if the customer writes a check against her accountE) None of the above
F) A) and B)

Question 14

The following are terms used to describe banks in the collection system except:

Accepted Answer

A)   the collecting bank
B)   the depository bank
C)   the intermediary bank
D)   the maker bank
E)   the payor bankF) A) and B)
G) A) and C)

Question 15

Once a check becomes stale,the bank is no longer obligated to pay it.

Accepted Answer

A) True 
 B)False  True

Question 16

If a bank wrongfully dishonors a check,then it is:

Accepted Answer

A)   liable to the drawer for damages
B)   liable to the payee or holder for damages
C)   liable to the drawee for damages
D)   A and C only
E)   A and B onlyF) B) and E)
G) A) and B)

Question 17

Why are there such rigid and short deadlines for banks to decide whether or not to pay items? Does the midnight deadline force banks into making payment decisions before they have adequate information?

Accepted Answer

For there to be confidence in the bankin...

Question 18

Which of the following statements is not true if a check is certified by a bank?

Accepted Answer

A)   The refusal of the bank to certify the check is a type of dishonor.
B)   The drawer is not liable if the drawer has the check certified.
C)   The drawer is not liable if a holder has the check certified.
D)   All persons who indorsed the check before certification are discharged by certification.
E)   The bank must indicate on the face of the check that the check is certified.F) A) and E)
G) C) and E)

Question 19

The deadline for a bank to dishonor an item received on a particular day is:

Accepted Answer

A)   midnight of the next banking day,except for "on us" items,for which the deadline is midnight of the same banking day
B)   midnight of the next banking day,except for "on us" items,for which the deadline is midnight of the second banking day
C)   midnight of the next banking day,except for "on us" items,for which the deadline is the open of business on the second banking day
D)   midnight of the next banking day,except for "on them" items,for which the deadline is midnight of the second banking dayE) A) and C)
F) A) and B)

Question 20

Drew makes out a check payable to Bill.Bill alters the amount of the check from $10 to $100,and cashes the check at the local grocery store.The grocery store later cashes the check at the drawee bank,which deducts $100 from Drew's account.Drew learns of the alteration and complains to the bank.Which is true in this situation?

Accepted Answer

A)   The bank must recredit Drew's account for $90.
B)   The bank can collect from the grocery store for breach of presentment warranties.
C)   The grocery store can collect from Bill for breach of presentment warranties.
D)   A,B,and C are true.
E)   A and C only are true.F) A) and D)
G) A) and B)

Exam 25: Checks, the Banking System, and E-Money

Correct Answer
verified
The bank is liable only for the amount f...
View Answer

Banks must credit all customers' deposits to their accounts on the same day that the deposits are received.

Correct Answer
verified

The main reason that someone would use a cashier's check to make a payment rather than a check drawn on that person's own account is that:

Correct Answer
verified
C

Which of the following describes a bank's duty to ensure that a drawer's signature is genuine?

Correct Answer
verified

Correct Answer
verified

As a holder,the payee of a check can either demand payment or indorse the check to another person.

Correct Answer
verified

Which of the following is true of a stop-payment order issue to a bank?

Correct Answer
verified

Checks that have more than one indorser have no validity.

Correct Answer
verified
False

Bank deposits and collections are covered under Article 3 of the Uniform Commercial Code.

Correct Answer
verified

The issuing bank serves as both the drawer and drawee of a cashier's check.

Correct Answer
verified

The drawee is the customer who maintains the checking account.

Correct Answer
verified

What type of relationship is created when a customer makes a deposit into her account at a bank?

Correct Answer
verified

A principal-agent relationship is created between a customer and a bank:

Correct Answer
verified

The following are terms used to describe banks in the collection system except:

Correct Answer
verified

Once a check becomes stale,the bank is no longer obligated to pay it.

Correct Answer
verified
True

If a bank wrongfully dishonors a check,then it is:

Correct Answer
verified

Why are there such rigid and short deadlines for banks to decide whether or not to pay items? Does the midnight deadline force banks into making payment decisions before they have adequate information?

Correct Answer
verified
For there to be confidence in the bankin...
View Answer

Which of the following statements is not true if a check is certified by a bank?

Correct Answer
verified

The deadline for a bank to dishonor an item received on a particular day is:

Correct Answer
verified

Correct Answer
verified

Exam 25: Checks, the Banking System, and E-Money

Correct AnswerverifiedThe bank is liable only for the amount f...View AnswerShow Answer

Banks must credit all customers' deposits to their accounts on the same day that the deposits are received.

Correct AnswerverifiedShow Answer

The main reason that someone would use a cashier's check to make a payment rather than a check drawn on that person's own account is that:

Correct AnswerverifiedC

Which of the following describes a bank's duty to ensure that a drawer's signature is genuine?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

As a holder,the payee of a check can either demand payment or indorse the check to another person.

Correct AnswerverifiedShow Answer

Which of the following is true of a stop-payment order issue to a bank?

Correct AnswerverifiedShow Answer

Checks that have more than one indorser have no validity.

Correct AnswerverifiedFalse

Bank deposits and collections are covered under Article 3 of the Uniform Commercial Code.

Correct AnswerverifiedShow Answer

The issuing bank serves as both the drawer and drawee of a cashier's check.

Correct AnswerverifiedShow Answer

The drawee is the customer who maintains the checking account.

Correct AnswerverifiedShow Answer

What type of relationship is created when a customer makes a deposit into her account at a bank?

Correct AnswerverifiedShow Answer

A principal-agent relationship is created between a customer and a bank:

Correct AnswerverifiedShow Answer

The following are terms used to describe banks in the collection system except:

Correct AnswerverifiedShow Answer

Once a check becomes stale,the bank is no longer obligated to pay it.

Correct AnswerverifiedTrue

If a bank wrongfully dishonors a check,then it is:

Correct AnswerverifiedShow Answer

Why are there such rigid and short deadlines for banks to decide whether or not to pay items? Does the midnight deadline force banks into making payment decisions before they have adequate information?

Correct AnswerverifiedFor there to be confidence in the bankin...View AnswerShow Answer

Which of the following statements is not true if a check is certified by a bank?

Correct AnswerverifiedShow Answer

The deadline for a bank to dishonor an item received on a particular day is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified
The bank is liable only for the amount f...
View Answer

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
False

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified
For there to be confidence in the bankin...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified