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

Checks that have more than one indorser have no validity.

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:

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

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?

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

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

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

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

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?

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

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

The drawee is the customer who maintains the checking account.

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

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

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?

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

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

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:

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

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