Question 1

Which of the following is true with regard to the federal Electronic Fund Transfer Act?

Accepted Answer

A)  It is primarily a disclosure statute. 
B)  It gives the same protections to customers that are found in Article 4. 
C)  It limits a customer's liability for unauthorized transfers to $500 if notification requirements are met. 
D)  All of these. 
A)  It is primarily a disclosure statute. 
B)  It gives the same protections to customers that are found in Article 4. 
C)  It limits a customer's liability for unauthorized transfers to $500 if notification requirements are met. 
D)  All of these. A

Question 2

Tania calls her bank to issue an oral stop payment order on a check on March 1. She then leaves town for two weeks to visit her mother. When she returns, she goes to the bank to sign a written stop payment order, but finds the bank has already paid the check. What recourse does she have? Explain, citing provisions in Article 4.

Accepted Answer

She may not have any recourse if she ordered the stop payment after the check had cleared the bank, or if it was paid more than 14 days after she ordered the stop payment orally. If the stop payment order was received in time, and if the check was paid within 14 days of March 1st, the bank must reimburse Tania for the amount she can establish as a loss resulting from the payment (UCC Sec. 4-403).

Question 3

For how long is a written stop payment order valid?

Accepted Answer

A)  One month 
B)  Six weeks 
C)  Six months 
D)  One year 
A)  One month 
B)  Six weeks 
C)  Six months 
D)  One year C

Question 4

A preauthorized fund transfer may be made from a consumer's account if the authorization is done in advance and in writing.

Accepted Answer

A) True 
 B)False

Question 5

Theresa has just started working as a teller for First Bank. A man comes into the bank with a $100 check that is eight months old. She goes to the manager to ask whether she should pay it. If you were the manager, what would you advise her? Explain.

Accepted Answer

Banks are not obligated to pay a check m

Question 6

Check 21 permits banks to remove an original paper check from the check collection process and send instead a substitute check.

Accepted Answer

A) True 
 B)False

Question 7

A system for electronic funds transfers (EFT) in which machines are located in a merchant's store and are activated by the consumer's identification card and code is known as:

Accepted Answer

A)  POS. 
B)  RAM. 
C)  EFTA. 
D)  CHIPS. 
A)  POS. 
B)  RAM. 
C)  EFTA. 
D)  CHIPS.

Question 8

The Check Clearing for the 21st Century Act requires banks to accept checks in electronic form.

Accepted Answer

A) True 
 B)False

Question 9

Lois takes her paycheck to Third National Bank for deposit at 6 p.m. on Wednesday. Third National Bank has until when to forward the check?

Accepted Answer

A)  Midnight Thursday 
B)  Midnight Friday 
C)  Close of business Friday 
D)  Close of business Thursday 
A)  Midnight Thursday 
B)  Midnight Friday 
C)  Close of business Friday 
D)  Close of business Thursday

Question 10

Cheryl writes checks totaling $200, but she has only $100 in her account. Check #101 is for $50; #102 is for $75; #103 is for $25; and #104 is for $50. All of the checks reach the bank on the same day. In what order should the bank charge them?

Accepted Answer

A)  Under Article 4, it must charge them in the order in which they were drawn. 
B)  It must call the customer to ask which items should be paid. 
C)  The bank may pay them in any order it deems convenient. 
D)  The bank must dishonor all of the checks. 
A)  Under Article 4, it must charge them in the order in which they were drawn. 
B)  It must call the customer to ask which items should be paid. 
C)  The bank may pay them in any order it deems convenient. 
D)  The bank must dishonor all of the checks.

Question 11

An ATM transaction is activated with a plastic identification card and a POS.

Accepted Answer

A) True 
 B)False

Question 12

Point of sale systems permit customers to charge items to a charge account at a bank.

Accepted Answer

A) True 
 B)False

Question 13

Darla drew a $100 check on ABC Bank payable "to the order of Pamela." Pamela cashed the check at First Bank.
First Bank is an agent of Pamela until the drawee bank pays the check.

Accepted Answer

A) True 
 B)False

Question 14

The relationship between the payor bank and its checking account customer is exclusively governed by statute and leaves no room for contractual modifications.

Accepted Answer

A) True 
 B)False

Question 15

Sylvia deposits a $50 check drawn on Valley Bank into her account at First Bank. First Bank transfers the check to Second Bank, which in turn forwards it to Valley Bank, which pays the item. Which of the following is correct?

Accepted Answer

A)  Valley Bank is the payor bank and the drawee bank. 
B)  Valley Bank is the drawee bank and the collecting bank. 
C)  Valley Bank is the payor bank and the collecting bank. 
D)  Valley Bank is the payor bank, the drawee bank and the collecting bank. 
A)  Valley Bank is the payor bank and the drawee bank. 
B)  Valley Bank is the drawee bank and the collecting bank. 
C)  Valley Bank is the payor bank and the collecting bank. 
D)  Valley Bank is the payor bank, the drawee bank and the collecting bank.

Question 16

Montey receives his monthly bank statement on December 30th. He looks at it quickly, then sets it aside. Three days later, he examines it again and discovers a forged check. What must he do to avoid responsibility for the check? Cite Code provisions.

Accepted Answer

He must notify the bank promptly, in a r

Question 17

David dies an untimely death in a boating accident two days after writing a check to his landlord. When the check is presented to his bank three weeks later, they refuse to pay. The landlord will have to file a claim in any probate proceedings if he wishes to collect on the check.

Accepted Answer

A) True 
 B)False

Question 18

If Margie makes out a check for $27.50 when she has only $10 in her account, her bank may:

Accepted Answer

A)  refuse to pay the check. 
B)  pay the check. 
C)  bill Margie for $17.50 and a service charge. 
D)  Any of these. 
A)  refuse to pay the check. 
B)  pay the check. 
C)  bill Margie for $17.50 and a service charge. 
D)  Any of these.

Question 19

If a bank pays on a check even though it has a "stop payment order," it is liable to the customer only if the customer can prove a loss because of the payment.

Accepted Answer

A) True 
 B)False

Question 20

ABC Bank sent Joanne, a depositor, her January statement on January 31. Within what length of time after this date will Joanne have to examine the statement and enclosed items and notify ABC bank of any errors?

Accepted Answer

A)  10 days 
B)  30 days 
C)  60 days 
D)  1 year 
A)  10 days 
B)  30 days 
C)  60 days 
D)  1 year

Exam 29: Bank Deposits, Collections, and Funds Transfers

Which of the following is true with regard to the federal Electronic Fund Transfer Act?

For how long is a written stop payment order valid?

A preauthorized fund transfer may be made from a consumer's account if the authorization is done in advance and in writing.

Theresa has just started working as a teller for First Bank. A man comes into the bank with a $100 check that is eight months old. She goes to the manager to ask whether she should pay it. If you were the manager, what would you advise her? Explain.

Check 21 permits banks to remove an original paper check from the check collection process and send instead a substitute check.

A system for electronic funds transfers (EFT) in which machines are located in a merchant's store and are activated by the consumer's identification card and code is known as:

The Check Clearing for the 21st Century Act requires banks to accept checks in electronic form.

Lois takes her paycheck to Third National Bank for deposit at 6 p.m. on Wednesday. Third National Bank has until when to forward the check?

Cheryl writes checks totaling $200, but she has only $100 in her account. Check #101 is for $50; #102 is for $75; #103 is for $25; and #104 is for $50. All of the checks reach the bank on the same day. In what order should the bank charge them?

An ATM transaction is activated with a plastic identification card and a POS.

Point of sale systems permit customers to charge items to a charge account at a bank.

Darla drew a $100 check on ABC Bank payable "to the order of Pamela." Pamela cashed the check at First Bank. First Bank is an agent of Pamela until the drawee bank pays the check.

The relationship between the payor bank and its checking account customer is exclusively governed by statute and leaves no room for contractual modifications.

Sylvia deposits a $50 check drawn on Valley Bank into her account at First Bank. First Bank transfers the check to Second Bank, which in turn forwards it to Valley Bank, which pays the item. Which of the following is correct?

Montey receives his monthly bank statement on December 30th. He looks at it quickly, then sets it aside. Three days later, he examines it again and discovers a forged check. What must he do to avoid responsibility for the check? Cite Code provisions.

David dies an untimely death in a boating accident two days after writing a check to his landlord. When the check is presented to his bank three weeks later, they refuse to pay. The landlord will have to file a claim in any probate proceedings if he wishes to collect on the check.

If Margie makes out a check for $27.50 when she has only $10 in her account, her bank may:

If a bank pays on a check even though it has a "stop payment order," it is liable to the customer only if the customer can prove a loss because of the payment.

ABC Bank sent Joanne, a depositor, her January statement on January 31. Within what length of time after this date will Joanne have to examine the statement and enclosed items and notify ABC bank of any errors?

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