Question 1

A drawer may be held criminally liable if a check or draft is dishonored.

Accepted Answer

A) True 
 B)False

Question 2

Customers are precluded from asserting unauthorized signatures or alterations if they do not report them within __________ from the time the bank statement is received.

Accepted Answer

A)  fourteen (14) days 
B)  forty (40) days 
C)  six (6) months 
D)  one (1) year 
A)  fourteen (14) days 
B)  forty (40) days 
C)  six (6) months 
D)  one (1) year

Question 3

When a bank certifies a check, the amount involved in the certification will be debited in the depositor's account until payment of the certified check.

Accepted Answer

A) True 
 B)False

Question 4

Although a drawer has stopped payment on a check, the drawer still may be held liable on the check.

Accepted Answer

A) True 
 B)False

Question 5

Certification of a check at the request of a holder:

Accepted Answer

A)  releases all prior secondary parties. 
B)  releases the drawer but not prior indorsers. 
C)  releases prior indorsers, but not the drawer. 
D)  does not release all prior secondary parties. 
A)  releases all prior secondary parties. 
B)  releases the drawer but not prior indorsers. 
C)  releases prior indorsers, but not the drawer. 
D)  does not release all prior secondary parties.

Question 6

Sondra realized on Tuesday that she had dropped her bank EFT card after using it at an automatic teller machine. She telephoned the bank on the following Monday to notify it of the loss. By that time, someone had used the card to withdraw $800 from Sondra's account. The bank said it would cover $300 of that amount. Sondra sued for the full amount, claiming that she had exercised reasonable care in reporting the loss, especially because the card was lost on bank premises. Will she be able to recover the full $800?

Accepted Answer

No. Sondra's liability for loss in this

Question 7

In theory, a valid check can be written on a cocktail napkin.

Accepted Answer

A) True 
 B)False

Question 8

The EFTA is concerned with the:

Accepted Answer

A)  elimination of foreign terrorists 
B)  eradication of foreign tribunals 
C)  electronic transfers of funds 
D)  eleemosynary, or charitable, transfers of funds 
A)  elimination of foreign terrorists 
B)  eradication of foreign tribunals 
C)  electronic transfers of funds 
D)  eleemosynary, or charitable, transfers of funds

Question 9

All of the following statements is incorrect concerning stale checks except: ______.

Accepted Answer

A)  A check is stale when dated more than six (6) months before presentation to the bank. 
B)  Banks are required to pay stale checks unless a stop payment order has been issued. 
C)  Banks can pay in good faith after three (3) months. 
D)  Stale checks do not have to be verified with the bank's customer. 
A)  A check is stale when dated more than six (6) months before presentation to the bank. 
B)  Banks are required to pay stale checks unless a stop payment order has been issued. 
C)  Banks can pay in good faith after three (3) months. 
D)  Stale checks do not have to be verified with the bank's customer.

Question 10

The delivery of a check is an assignment of money on deposit, and the drawee bank is required to pay the holder the amount of the check.

Accepted Answer

A) True 
 B)False

Question 11

If a consumer reports the loss before the card is used, the consumer: ______.

Accepted Answer

A)  is not liable for any charges. 
B)  is only liable for losses up to $50. 
C)  is not liable for losses over $500. 
D)  is liable if they failed to examine periodic banking statements. 
A)  is not liable for any charges. 
B)  is only liable for losses up to $50. 
C)  is not liable for losses over $500. 
D)  is liable if they failed to examine periodic banking statements.

Question 12

Which of the following statements describes a check?

Accepted Answer

A)  The drawer is always a bank. 
B)  The maker is always a bank. 
C)  A check is generally payable on demand. 
D)  A check is a particular kind of note. 
A)  The drawer is always a bank. 
B)  The maker is always a bank. 
C)  A check is generally payable on demand. 
D)  A check is a particular kind of note.

Question 13

Postdating a check changes the check from a demand draft to a time draft.

Accepted Answer

A) True 
 B)False

Question 14

To be effective, checks must be executed on forms that are printed expressly for that purpose and issued by a bank or other financial institution.

Accepted Answer

A) True 
 B)False

Question 15

The drawer of a check is always a bank.

Accepted Answer

A) True 
 B)False

Question 16

A bank must be given a reasonable amount of time to put a stop payment order into effect.

Accepted Answer

A) True 
 B)False

Question 17

A written stop payment order or confirmation is effective for:

Accepted Answer

A)  fourteen (14) days. 
B)  thirty (30) days. 
C)  six (6) months. 
D)  one (1) year. 
A)  fourteen (14) days. 
B)  thirty (30) days. 
C)  six (6) months. 
D)  one (1) year.

Question 18

A forged endorsement must be reported within one year of the time that the bank statement is received.

Accepted Answer

A) True 
 B)False

Question 19

Checks that involve amounts of more than $5,000 generally trigger the bank reporting requirements under the USA Patriot Act.

Accepted Answer

A) True 
 B)False

Question 20

Banks are liable for losses on counterfeit checks in all the following scenarios except:

Accepted Answer

A)  whether or not the bank acted reasonably in its processing systems in clearing the checks. 
B)  whether or not the bank complied with time requirements for customers regarding the checks. 
C)  whether or not the bank made an unreasonable mistake in paying the check. 
D)  whether or not presentment was valid. 
A)  whether or not the bank acted reasonably in its processing systems in clearing the checks. 
B)  whether or not the bank complied with time requirements for customers regarding the checks. 
C)  whether or not the bank made an unreasonable mistake in paying the check. 
D)  whether or not presentment was valid.

Exam 30: Checks and Funds Transfers

A drawer may be held criminally liable if a check or draft is dishonored.

Customers are precluded from asserting unauthorized signatures or alterations if they do not report them within __________ from the time the bank statement is received.

When a bank certifies a check, the amount involved in the certification will be debited in the depositor's account until payment of the certified check.

Although a drawer has stopped payment on a check, the drawer still may be held liable on the check.

Certification of a check at the request of a holder:

In theory, a valid check can be written on a cocktail napkin.

The EFTA is concerned with the:

All of the following statements is incorrect concerning stale checks except: ______.

The delivery of a check is an assignment of money on deposit, and the drawee bank is required to pay the holder the amount of the check.

If a consumer reports the loss before the card is used, the consumer: ______.

Which of the following statements describes a check?

Postdating a check changes the check from a demand draft to a time draft.

To be effective, checks must be executed on forms that are printed expressly for that purpose and issued by a bank or other financial institution.

The drawer of a check is always a bank.

A bank must be given a reasonable amount of time to put a stop payment order into effect.

A written stop payment order or confirmation is effective for:

A forged endorsement must be reported within one year of the time that the bank statement is received.

Checks that involve amounts of more than $5,000 generally trigger the bank reporting requirements under the USA Patriot Act.

Banks are liable for losses on counterfeit checks in all the following scenarios except:

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, Social Forces, and the Law

The Constitution As the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

Crimes

Torts

Intellectual Property Rights and the Internet

The Legal Environment of International Trade

Nature and Classes of Contracts: Contracting on the Internet

Formation of Contracts: Offer and Acceptance

Capacity and Genuine Assent

Consideration

Legality and Public Policy

Writing, Electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Kinds of Negotiable Instruments and Negotiability

Transfers of Negotiable Instruments and Warranties of Parties

Liability of the Parties Under Negotiable Instruments

Nature of the Debtor Creditor Relationship

Consumer Protection

Secured Transactions in Personal Property

Bankruptcy

Insurance

Agency

Third Persons in Agency

Regulation of Employment

Equal Employment Opportunity Law

Types of Business Organizations

Partnerships

LPs, LLCs, and LLPs

Corporate Formation

Shareholder Rights in Corporations

Securities Regulation

Accountants Liability and Malpractice

Management of Corporations

Real Property

Environmental Law and Land Use Controls

Leases

Decedents Estates and Trusts

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