Exam 23: Checks and Banking in the Digital Age

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Dru signs a check "pay to the order of Eppie" drawn on Dru's account in First Federal Bank.Greta forges Eppie's indorsement.First Federal pays the check.Most likely

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(Multiple Choice)

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Question 1

Correct Answer:

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A written stop payment order is valid for fourteen days.

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(True/False)

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Question 2

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False

Tiny authorizes United Bank to make transfers from his account to make payments on his debt to Vic's Auto Dealership,which sold Tiny the car that serves as collateral for the debt.After three payments,Vic's repossesses the car and refuses to return it.Tiny phones the bank to stop the payments and follows up with a confirming letter.The bank fails to stop the next two payments,and Vic's refuses to refund anything.Can Tiny get his money from the bank Explain.

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(Essay)

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Question 3

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Yes.Under the Electronic Fund Transfer Act (EFTA),a financial institution is liable for failing to stop payment of a preauthorized transfer from a customer's account when instructed to do so under the account's terms and conditions,which likely require that notice must precede a scheduled payment within a certain period of time.For other electronic transactions,reversal is generally not possible,however,because of the instantaneous nature of the transactions,and the EFTA does not provide for their reversal.

Elmer can write checks on his account at Finance Bank.Gina steals the checks,forges Elmer's signature,and cashes the checks at Finance.The bank is excused from any liability if,after receipt of the first forged check,Elmer fails to report the forgeries within

(Multiple Choice)

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Question 4

Kip writes a check for $1,000 drawn on Local Bank and presents it to Mira.Mira presents the check for payment to Local Bank,which dishonors it.The party most likely liable to Mira is

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Question 5

Clyde issues a check payable to Discount Mart.Elle,Discount's cashier,forges the store's indorsement and deposits the check in her bank account.Clyde's bank,First State Bank,pays the check.Clyde can recover from

(Multiple Choice)

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Question 6

Fact Pattern 23-1 (Questions 15 and 16 apply) Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair the car properly, issues a stop-payment order. -Refer to Fact Pattern 23-1.Capital Bank pays the check.Capital

(Multiple Choice)

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Question 7

Dina's debit card,issued by Eminent Bank,is stolen and used without Dina's permission.Dina tells Eminent Bank within thirty days.Dina may be required to pay no more than

(Multiple Choice)

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Question 8

If a customer's debit card is lost or stolen,the customer will not be liable for any unauthorized use of the card.

(True/False)

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Question 9

A check carries with it an implied promise to reimburse the bank for paying the check.

(True/False)

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Question 10

E-Bank,an online financial institution,gives financial information about Paula and other customers to a federal agency without the customers' permission.E-Bank may be liable under

(Multiple Choice)

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Question 11

The incompetence of a customer revokes a bank's authority to pay an item.

(True/False)

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Question 12

A stale check is one that has been outstanding for longer than one month.

(True/False)

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Question 13

Gaining unauthorized access to an electronic fund transfer system is a felony.

(True/False)

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Question 14

Generally,a bank has no obligation to pay a customer's overdrafts.

(True/False)

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Question 15

A drawer is liable to the holder of a check if the check is not honored.

(True/False)

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Question 16

Dan writes a check to Emma on his account at First State Bank.The bank dishonors the check even though Dan has sufficient funds in his account.The bank is

(Multiple Choice)

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Question 17

First Community Bank agrees to accept a check by setting aside sufficient funds to cover the amount.This check is considered

(Multiple Choice)

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Question 18

Liu signs a check "pay to the order of Marv" drawn on Liu's account in National Bank.Liu later orders National not to pay the check,but the bank pays it over Liu's order.Subsequent checks written on Liu's account "bounce." Most likely liable for the costs to Liu is

(Multiple Choice)

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Question 19

A customer has sixty days from the date of receipt of a statement of an electronic transfer to notify the financial institution of any errors.

(True/False)

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Question 20

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Exam 23: Checks and Banking in the Digital Age

Dru signs a check "pay to the order of Eppie" drawn on Dru's account in First Federal Bank.Greta forges Eppie's indorsement.First Federal pays the check.Most likely

A written stop payment order is valid for fourteen days.

Elmer can write checks on his account at Finance Bank.Gina steals the checks,forges Elmer's signature,and cashes the checks at Finance.The bank is excused from any liability if,after receipt of the first forged check,Elmer fails to report the forgeries within

Kip writes a check for $1,000 drawn on Local Bank and presents it to Mira.Mira presents the check for payment to Local Bank,which dishonors it.The party most likely liable to Mira is

Clyde issues a check payable to Discount Mart.Elle,Discount's cashier,forges the store's indorsement and deposits the check in her bank account.Clyde's bank,First State Bank,pays the check.Clyde can recover from

Dina's debit card,issued by Eminent Bank,is stolen and used without Dina's permission.Dina tells Eminent Bank within thirty days.Dina may be required to pay no more than

If a customer's debit card is lost or stolen,the customer will not be liable for any unauthorized use of the card.

A check carries with it an implied promise to reimburse the bank for paying the check.

E-Bank,an online financial institution,gives financial information about Paula and other customers to a federal agency without the customers' permission.E-Bank may be liable under

The incompetence of a customer revokes a bank's authority to pay an item.

A stale check is one that has been outstanding for longer than one month.

Gaining unauthorized access to an electronic fund transfer system is a felony.

Generally,a bank has no obligation to pay a customer's overdrafts.

A drawer is liable to the holder of a check if the check is not honored.

Dan writes a check to Emma on his account at First State Bank.The bank dishonors the check even though Dan has sufficient funds in his account.The bank is

First Community Bank agrees to accept a check by setting aside sufficient funds to cover the amount.This check is considered

Liu signs a check "pay to the order of Marv" drawn on Liu's account in National Bank.Liu later orders National not to pay the check,but the bank pays it over Liu's order.Subsequent checks written on Liu's account "bounce." Most likely liable for the costs to Liu is

A customer has sixty days from the date of receipt of a statement of an electronic transfer to notify the financial institution of any errors.

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