Question 1

Banks often take the position that a stop-payment order must:

Accepted Answer

A) be in writing. 
B) explain why the check is to be stopped. 
C) give notice at least 3 business days before the check is presented. 
D) be correct to the penny because they rely on computers. 
A) be in writing. 
B) explain why the check is to be stopped. 
C) give notice at least 3 business days before the check is presented. 
D) be correct to the penny because they rely on computers.

Question 2

The case in the text,Kruser v.Bank of America NT & SA,reinforces the principal that:

Accepted Answer

A) courts are sympathetic to consumers and consumers are entitled to time extensions. 
B) the EFTA was enacted to protect the consumer and will protect against all instances of fraud. 
C) the EFTA requires a customer to provide timely notification of any unauthorized use of a credit card to limit his liability. 
D) the consumer is responsible for any loss that occurred from his negligence. 
A) courts are sympathetic to consumers and consumers are entitled to time extensions. 
B) the EFTA was enacted to protect the consumer and will protect against all instances of fraud. 
C) the EFTA requires a customer to provide timely notification of any unauthorized use of a credit card to limit his liability. 
D) the consumer is responsible for any loss that occurred from his negligence.

Question 3

Mendel had his car repaired by Harry's Garage (HG).He paid by check drawn on ABZ Bank when he collected his car.On the drive home,Mendel realized that the repair had not been made.He immediately called ABZ on his cell phone and told the bank to stop payment on the check.Three days later,HG negotiated the check to Amy,a holder in due course.When Amy went to cash the check,ABZ Bank refused to honor it.What is Mendel's liability on this check?

Accepted Answer

A) Mendel is not liable to anyone because he stopped the check in time. 
B) Mendel is liable to Amy because the stop payment order was made through a phone call. 
C) Mendel is not liable to Amy because she took the check from HG. 
D) Mendel is liable to Amy because he is the drawer of the check. 
A) Mendel is not liable to anyone because he stopped the check in time. 
B) Mendel is liable to Amy because the stop payment order was made through a phone call. 
C) Mendel is not liable to Amy because she took the check from HG. 
D) Mendel is liable to Amy because he is the drawer of the check.

Question 4

Which of the following is not an example of an electronic funds transfer system?

Accepted Answer

A) Wire transfers 
B) Point-of-sale terminals 
C) Preauthorized payments 
D) Telephone transfers 
A) Wire transfers 
B) Point-of-sale terminals 
C) Preauthorized payments 
D) Telephone transfers

Question 5

A stop-payment order must be made so a bank is given a reasonable opportunity to act on the order.

Accepted Answer

A) True 
 B)False

Question 6

In the ________ Congress set out mandatory schedules limiting check holds and specifying when funds are to be made available to customers by depositary institutions.

Accepted Answer

A) Expedited Funds Availability Act 
B) Electronic Fund Transfer Act 
C) Electronic Banking Act 
D) Federal Reserve Act 
A) Expedited Funds Availability Act 
B) Electronic Fund Transfer Act 
C) Electronic Banking Act 
D) Federal Reserve Act

Question 7

Which of the following is true of check collection?

Accepted Answer

A) Checks and other drafts collected through the banking system usually have two parties-the drawer and the drawee bank. 
B) If the payee deposits the check at a bank other than the drawee bank,the latter will take a series of steps necessary to reflect the deposit as a credit to the payee's account. 
C) If the payee deposits the check at the same bank as the drawee bank,the depositary bank will make the ledger entry showing the deposit as a credit to the payee's account. 
D) If the drawee and depositary banks are in the same town or county,the depositary bank will indorse the check and deliver it to the drawee bank for payment. 
A) Checks and other drafts collected through the banking system usually have two parties-the drawer and the drawee bank. 
B) If the payee deposits the check at a bank other than the drawee bank,the latter will take a series of steps necessary to reflect the deposit as a credit to the payee's account. 
C) If the payee deposits the check at the same bank as the drawee bank,the depositary bank will make the ledger entry showing the deposit as a credit to the payee's account. 
D) If the drawee and depositary banks are in the same town or county,the depositary bank will indorse the check and deliver it to the drawee bank for payment.

Question 8

A drawer's written stop-payment order is valid for:

Accepted Answer

A) six months,unless the drawer extends it in writing. 
B) only 14 days,and can be extended if the drawer sends a written order. 
C) one year,unless it is renewed in writing. 
D) a check of $500 and above. 
A) six months,unless the drawer extends it in writing. 
B) only 14 days,and can be extended if the drawer sends a written order. 
C) one year,unless it is renewed in writing. 
D) a check of $500 and above.

Question 9

Which of the following is most true regarding checks with altered amounts?

Accepted Answer

A) The bank may not pay such checks as altered in all cases. 
B) The bank may pay such checks as altered where the alteration is due to the customer's negligence and the alteration is not obvious. 
C) The bank must pay such checks as originally drawn. 
D) The bank cannot ever pay such checks. 
A) The bank may not pay such checks as altered in all cases. 
B) The bank may pay such checks as altered where the alteration is due to the customer's negligence and the alteration is not obvious. 
C) The bank must pay such checks as originally drawn. 
D) The bank cannot ever pay such checks.

Question 10

Unlike many other federal consumer protection measures,the Electronic Fund Transfer Act does not require disclosure of important terms to the consumer.

Accepted Answer

A) True 
 B)False

Exam 34: Checks and Electronic Transfers

Banks often take the position that a stop-payment order must:

The case in the text,Kruser v.Bank of America NT & SA,reinforces the principal that:

Which of the following is not an example of an electronic funds transfer system?

A stop-payment order must be made so a bank is given a reasonable opportunity to act on the order.

In the ________ Congress set out mandatory schedules limiting check holds and specifying when funds are to be made available to customers by depositary institutions.

Which of the following is true of check collection?

A drawer's written stop-payment order is valid for:

Which of the following is most true regarding checks with altered amounts?

Unlike many other federal consumer protection measures,the Electronic Fund Transfer Act does not require disclosure of important terms to the consumer.

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