Question 1

When there are insufficient funds in a drawer's account,and a check is presented to be honored,the bank can:

Accepted Answer

A)  honor the check,and charge the customer on the next deposit. 
B)  return the check,and charge a penalty. 
C)  hold the check and payment,even if the holder suffers a loss against the drawer. 
D)  charge a fee to the holder in due course and to the drawer. 
A)  honor the check,and charge the customer on the next deposit. 
B)  return the check,and charge a penalty. 
C)  hold the check and payment,even if the holder suffers a loss against the drawer. 
D)  charge a fee to the holder in due course and to the drawer.

Question 2

Ben,a Big Bank checking account customer,wrote a check for $1,000 to Mia.At the time that Mia presents the check for payment at Big Bank,Ben has $1,500 in his account.However,the clerk mistakenly refuses to pay the check and stamps it NSF.Mia then goes to the local prosecutor,and Ben is later arrested for writing a bad check.Ben could recover from Big Bank the damages involved in his arrest,such as attorney's fees.

Accepted Answer

A) True 
 B)False

Question 3

A check on which one bank is the drawer and another bank is a drawee is a:

Accepted Answer

A)  cashier's check. 
B)  antedated check. 
C)  certified check. 
D)  teller's check. 
A)  cashier's check. 
B)  antedated check. 
C)  certified check. 
D)  teller's check.

Question 4

Jane wrote a check for $10.She wrote this check in a careless and negligent manner,making alteration easy.Ben altered this check to read $1,000.His alteration was crude and obvious to anyone paying attention.Ben cashed the check at Jane's bank.The bank was negligent in accepting this check,but it deducted $1,000 from Jane's account.Jane sued the bank,and the jury determined that Jane's negligence contributes 50 percent to the loss and the bank's negligence contributes 50 percent.How much is Jane entitled to recover from her bank?

Accepted Answer

A)  Nothing,because she was negligent. 
B)  Half the loss. 
C)  The entire loss. 
D)  The entire loss plus her court costs. 
A)  Nothing,because she was negligent. 
B)  Half the loss. 
C)  The entire loss. 
D)  The entire loss plus her court costs.

Question 5

An oral stop-payment order normally is good for 14 days.

Accepted Answer

A) True 
 B)False

Question 6

A bank's right or duty to charge a depositor's account for a check can be terminated when a:

Accepted Answer

A)  stop-payment order from the depositor after the bank has certified a check. 
B)  depositor files a bankruptcy petition. 
C)  notice of garnishment of the account by the depositor. 
D)  creditor of the depositor files a bankruptcy petition after the notified cut-off hour on the banking day after the check is received. 
A)  stop-payment order from the depositor after the bank has certified a check. 
B)  depositor files a bankruptcy petition. 
C)  notice of garnishment of the account by the depositor. 
D)  creditor of the depositor files a bankruptcy petition after the notified cut-off hour on the banking day after the check is received.

Question 7

Checks and other drafts collected through the banking system usually have all of the following EXCEPT:

Accepted Answer

A)  bank. 
B)  payee. 
C)  drawer. 
D)  employee. 
A)  bank. 
B)  payee. 
C)  drawer. 
D)  employee.

Question 8

Banks are not required to disclose their funds availability policy to all of their customers.

Accepted Answer

A) True 
 B)False

Question 9

A teller's check is a check on which a bank is both the drawer and the drawee.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is most true regarding checks whose amount has been altered?

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 11

A check on which one bank is both the drawer and the drawee is called a:

Accepted Answer

A)  certified check. 
B)  cashier's check. 
C)  teller's check. 
D)  uncertified check. 
A)  certified check. 
B)  cashier's check. 
C)  teller's check. 
D)  uncertified check.

Question 12

Which of the following is true in case of death or incompetence of a customer?

Accepted Answer

A)  A bank cannot pay checks of a deceased customer until it has notice of the customer's death. 
B)  If a bank knows of a customer's death,it can pay checks written by the customer prior to his/her death,for a period of 30 days. 
C)  The deceased person's heirs or other persons claiming an interest in the account can order the bank to stop payment. 
D)  A bank can declare checks signed by the customer while he/she was alive,as null and void. 
A)  A bank cannot pay checks of a deceased customer until it has notice of the customer's death. 
B)  If a bank knows of a customer's death,it can pay checks written by the customer prior to his/her death,for a period of 30 days. 
C)  The deceased person's heirs or other persons claiming an interest in the account can order the bank to stop payment. 
D)  A bank can declare checks signed by the customer while he/she was alive,as null and void.

Question 13

Tom wrote a check to Mary for $10.Tom was careful and not negligent in the way he wrote the check.Nevertheless,Mary cleverly altered the check to read $1,000.Tom's bank cashed this check and deducted that amount from his account.Which of the following is correct?

Accepted Answer

A)  Tom is liable on this check,but only for $10. 
B)  Tom is liable on this check for $1,000. 
C)  Tom is liable on this check for nothing. 
D)  Tom must reimburse the bank for any losses it suffers related to this check. 
A)  Tom is liable on this check,but only for $10. 
B)  Tom is liable on this check for $1,000. 
C)  Tom is liable on this check for nothing. 
D)  Tom must reimburse the bank for any losses it suffers related to this check.

Question 14

Which of the following is true of the Check 21 Act?

Accepted Answer

A)  It allows banks to handle limited number of checks electronically. 
B)  It has made it mandatory for banks to return the canceled checks to the customers. 
C)  It authorizes banks to transform information they receive in electronic form back into a paper copy of the check. 
D)  It requires that banks keep the customers' original checks for a specified period of time. 
A)  It allows banks to handle limited number of checks electronically. 
B)  It has made it mandatory for banks to return the canceled checks to the customers. 
C)  It authorizes banks to transform information they receive in electronic form back into a paper copy of the check. 
D)  It requires that banks keep the customers' original checks for a specified period of time.

Question 15

If a customer does not discover a forged check and report it to the bank within one year from the time of the statement containing the check,the bank is not obligated to recredit his account for the amount of the forged check.

Accepted Answer

A) True 
 B)False

Question 16

"Check 21" is the popular name for a federal law that enables banks to process checks electronically.

Accepted Answer

A) True 
 B)False

Question 17

Shawn purchases a computer from Adelaide Electronics,and writes them a check of $1,000.However,after Shawn brought the computer home,it abruptly stopped working due to a virus attack.Shawn calls his bank ordering a stop-payment on the check.Adelaide Electronics gave the check to Jack Enterprises,their creditor.Shawn's bank honored the check when Jack presented it.Which of the following is true in this case?

Accepted Answer

A)  The bank is liable to recredit Shawn's account,since the bank did not follow Shawn's instructions. 
B)  Shawn will be able to show that he sustained losses since the bank honored the check to Jack. 
C)  The bank is not liable to recredit Shawn's account,since Shawn did not send the stop-payment order well in advance. 
D)  Shawn cannot have his account recredited because he will not be able to show that he sustained any loss. 
A)  The bank is liable to recredit Shawn's account,since the bank did not follow Shawn's instructions. 
B)  Shawn will be able to show that he sustained losses since the bank honored the check to Jack. 
C)  The bank is not liable to recredit Shawn's account,since Shawn did not send the stop-payment order well in advance. 
D)  Shawn cannot have his account recredited because he will not be able to show that he sustained any loss.

Question 18

Under the recent amendments to Article 4,postdated checks:

Accepted Answer

A)  are now invalid and create no obligation to pay on the drawee bank's part. 
B)  are not properly payable by the drawee bank until the date on the check. 
C)  may be paid by the drawee bank before the date on the check unless the customer has given notice to the contrary. 
D)  may be paid by the drawee bank unless the customer gives notice of the postdating in a way that at least partially describes the check. 
A)  are now invalid and create no obligation to pay on the drawee bank's part. 
B)  are not properly payable by the drawee bank until the date on the check. 
C)  may be paid by the drawee bank before the date on the check unless the customer has given notice to the contrary. 
D)  may be paid by the drawee bank unless the customer gives notice of the postdating in a way that at least partially describes the check.

Question 19

Banks can retain the legible copy of check for a period of:

Accepted Answer

A)  seven months. 
B)  thirty days. 
C)  seven years. 
D)  thirty weeks. 
A)  seven months. 
B)  thirty days. 
C)  seven years. 
D)  thirty weeks.

Question 20

In case a check is altered so skillfully that a bank is unable to detect the alteration,which of the following stands true?

Accepted Answer

A)  The bank should honor only those checks for which it receives a notice from the drawer. 
B)  The bank is allowed to charge to the account the amount for which the check originally was written. 
C)  The bank will be liable to recredit the drawer's account for negligence. 
D)  The bank will hold the drawer responsible for contributing to the alteration of the check. 
A)  The bank should honor only those checks for which it receives a notice from the drawer. 
B)  The bank is allowed to charge to the account the amount for which the check originally was written. 
C)  The bank will be liable to recredit the drawer's account for negligence. 
D)  The bank will hold the drawer responsible for contributing to the alteration of the check.

Exam 34: Checks and Electronic Transfers

When there are insufficient funds in a drawer's account,and a check is presented to be honored,the bank can:

A check on which one bank is the drawer and another bank is a drawee is a:

An oral stop-payment order normally is good for 14 days.

A bank's right or duty to charge a depositor's account for a check can be terminated when a:

Checks and other drafts collected through the banking system usually have all of the following EXCEPT:

Banks are not required to disclose their funds availability policy to all of their customers.

A teller's check is a check on which a bank is both the drawer and the drawee.

Which of the following is most true regarding checks whose amount has been altered?

A check on which one bank is both the drawer and the drawee is called a:

Which of the following is true in case of death or incompetence of a customer?

Tom wrote a check to Mary for $10.Tom was careful and not negligent in the way he wrote the check.Nevertheless,Mary cleverly altered the check to read $1,000.Tom's bank cashed this check and deducted that amount from his account.Which of the following is correct?

Which of the following is true of the Check 21 Act?

If a customer does not discover a forged check and report it to the bank within one year from the time of the statement containing the check,the bank is not obligated to recredit his account for the amount of the forged check.

"Check 21" is the popular name for a federal law that enables banks to process checks electronically.

Under the recent amendments to Article 4,postdated checks:

Banks can retain the legible copy of check for a period of:

In case a check is altered so skillfully that a bank is unable to detect the alteration,which of the following stands true?

The Nature of Law

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Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

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Introduction to Credit and Secured Transactions

Security Interests in Personal Property

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Introduction to Forms of Business and Formation of Partnerships

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History and Nature of Corporations

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Antitrust: the Sherman Act

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