Question 1

Did the bank properly dishonor the check to Rhea?

Accepted Answer

A) Yes,because Rhea's check was presented for payment after Jerome died,thus the check is nonpayable. 
B) The bank bears no responsibility when the customer dies. 
C) No,the bank is responsible for the check because Jerome died. 
D) No,the funds must be paid to Rhea by the bank,regardless of whether or not Jerome died. 
E) Yes,because it was Rhea's responsibility to notify the bank that Jerome had died. 
A) Yes,because Rhea's check was presented for payment after Jerome died,thus the check is nonpayable. 
B) The bank bears no responsibility when the customer dies. 
C) No,the bank is responsible for the check because Jerome died. 
D) No,the funds must be paid to Rhea by the bank,regardless of whether or not Jerome died. 
E) Yes,because it was Rhea's responsibility to notify the bank that Jerome had died. A

Question 2

[Bank Statement Woes] While examining her bank statements in July,Ariel found several questionable items and telephoned her bank to sort out the problems.First,Ariel was charged $50 in a recurring direct withdrawal for her yoga class.However,Ariel had notified the bank at 4:30 p.m.the previous day that she wanted to cancel the automatic payment.Second,Ariel noticed two EFT payments in February to a veterinarian in another state,which Ariel is certain she did not authorize,since she does not have a pet.Third,Ariel noticed several EFT payments for a magazine subscription,which Ariel did not authorize and she never received any magazines.Also,Ariel wants to stop payment on an internet order she made two hours ago for an expensive watch.
-Is Ariel correct that the recurring charge for the yoga class should be removed because she had notified the bank to cancel the automatic payment?

Accepted Answer

A) No,because she did not notify the bank at least three days before the preauthorized payment was scheduled. 
B) Yes,because she notified the bank to cancel the payment. 
C) No,because she did not notify the bank at least one business day before the preauthorized payment was scheduled. 
D) No,because she did not notify the bank at least twenty-four hours before the preauthorized payment was scheduled. 
E) Yes,because she notified the bank at least one business day before the payment was scheduled. 
A) No,because she did not notify the bank at least three days before the preauthorized payment was scheduled. 
B) Yes,because she notified the bank to cancel the payment. 
C) No,because she did not notify the bank at least one business day before the preauthorized payment was scheduled. 
D) No,because she did not notify the bank at least twenty-four hours before the preauthorized payment was scheduled. 
E) Yes,because she notified the bank at least one business day before the payment was scheduled. A

Question 3

Which of the following is false regarding certified checks?

Accepted Answer

A) If a bank refuses to certify a check,the check lacks the extra protection of certification. 
B) If a bank refuses to certify a check,the check is considered dishonored. 
C) If a bank certifies a check,the bank has become primarily liable for the check. 
D) If a bank certifies a check,the drawer of the check is no longer liable for the amount of the check. 
E) Once a check is certified,funds of the customer are removed from his or her account and placed in the bank's certified check account. 
A) If a bank refuses to certify a check,the check lacks the extra protection of certification. 
B) If a bank refuses to certify a check,the check is considered dishonored. 
C) If a bank certifies a check,the bank has become primarily liable for the check. 
D) If a bank certifies a check,the drawer of the check is no longer liable for the amount of the check. 
E) Once a check is certified,funds of the customer are removed from his or her account and placed in the bank's certified check account. B

Question 4

Who is responsible for the check to Kaleb?

Accepted Answer

A) No one,because the check is nonpayable because it had been altered. 
B) The bank is responsible for the check because it cashed a check that had been altered. 
C) Jerome,because the bank bears no responsibility for altered checks. 
D) No one,because the check is stale. 
E) Jerome,as he was responsible to notify the bank that the check was altered. 
A) No one,because the check is nonpayable because it had been altered. 
B) The bank is responsible for the check because it cashed a check that had been altered. 
C) Jerome,because the bank bears no responsibility for altered checks. 
D) No one,because the check is stale. 
E) Jerome,as he was responsible to notify the bank that the check was altered.

Question 5

Which statement is true about traveler's checks?

Accepted Answer

A) They require a countersignature by a person whose signature appears on the instrument. 
B) The person who purchases the traveler's check does not sign the instrument until it is ready to be used to make a purchase. 
C) They are payable on a designated date. 
D) Like other types of checks,a traveler's check need not state "traveler's check" on the instrument. 
E) The drawer is usually a small,local bank. 
A) They require a countersignature by a person whose signature appears on the instrument. 
B) The person who purchases the traveler's check does not sign the instrument until it is ready to be used to make a purchase. 
C) They are payable on a designated date. 
D) Like other types of checks,a traveler's check need not state "traveler's check" on the instrument. 
E) The drawer is usually a small,local bank.

Question 6

A bank involved in the check collection process may only be classified as one type of bank during the entire process.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is true regarding parties who are related to an order?

Accepted Answer

A) A drawer and a drawee are related to an order,but a payee is not. 
B) A drawer,payee,and drawee are all related to an order. 
C) A drawee and payee are related to an order,but a drawer is not. 
D) A payee is related to an order,but a drawer and a drawee are not. 
E) A payee and drawer are related to an order,but a drawee is not. 
A) A drawer and a drawee are related to an order,but a payee is not. 
B) A drawer,payee,and drawee are all related to an order. 
C) A drawee and payee are related to an order,but a drawer is not. 
D) A payee is related to an order,but a drawer and a drawee are not. 
E) A payee and drawer are related to an order,but a drawee is not.

Question 8

Which of the following is true regarding what a bank may do to offer overdraft protection to customers?

Accepted Answer

A) Under federal law,the only option open to a bank in the event of a customer's overdraft is to credit the customer's account although no charge may be made for the service. 
B) In regard to overdraft protection a bank may 1)credit a customer's checking account and charge for this service,2)link a checking account to the customer's savings account to cover the overdraft,and 3)link a checking account to the customer's credit card to cover the overdraft. 
C) In regard to overdraft protection a bank may 1)credit a customer's checking account although federal law prohibits charging for this service,2)link a checking account to the customer's savings account to cover the overdraft,and 3)link a checking account to the customer's credit card to cover the overdraft. 
D) Under federal law,the only option open to a bank in the event of a customer's overdraft is to credit the customer's account,and a charge may be made for the service. 
E) In regard to overdraft protection a bank has only two options 1)link a checking account to the customer's savings account to cover the overdraft,and 2)link a checking account to the customer's credit card to cover the overdraft. 
A) Under federal law,the only option open to a bank in the event of a customer's overdraft is to credit the customer's account although no charge may be made for the service. 
B) In regard to overdraft protection a bank may 1)credit a customer's checking account and charge for this service,2)link a checking account to the customer's savings account to cover the overdraft,and 3)link a checking account to the customer's credit card to cover the overdraft. 
C) In regard to overdraft protection a bank may 1)credit a customer's checking account although federal law prohibits charging for this service,2)link a checking account to the customer's savings account to cover the overdraft,and 3)link a checking account to the customer's credit card to cover the overdraft. 
D) Under federal law,the only option open to a bank in the event of a customer's overdraft is to credit the customer's account,and a charge may be made for the service. 
E) In regard to overdraft protection a bank has only two options 1)link a checking account to the customer's savings account to cover the overdraft,and 2)link a checking account to the customer's credit card to cover the overdraft.

Question 9

Which statement is true regarding Pedro's statement that once the check had been dishonored,it could not be presented again?

Accepted Answer

A) He was incorrect.The check may be presented again for payment only if notice has been given both to endorsers and the drawer. 
B) He was correct. 
C) He was incorrect.The holder may attempt to resubmit the check at a later date only if all endorsers of the check have been notified of the dishonor. 
D) He was incorrect.The holder can attempt to resubmit the check at a later date. 
E) He was incorrect.The holder may resubmit the check only if notice is given to the drawer. 
A) He was incorrect.The check may be presented again for payment only if notice has been given both to endorsers and the drawer. 
B) He was correct. 
C) He was incorrect.The holder may attempt to resubmit the check at a later date only if all endorsers of the check have been notified of the dishonor. 
D) He was incorrect.The holder can attempt to resubmit the check at a later date. 
E) He was incorrect.The holder may resubmit the check only if notice is given to the drawer.

Question 10

[Cash Availability] Arturo,who owns a vineyard in Northern California,deposits two checks in his local bank on Monday.One check is from Simon,who lives in the area,and the other is from Zina,who lives in Atlanta.Arturo needs to write a check to a supplier from his local account.
-Are the funds from both checks required to be available at the same time for Arturo to use?

Accepted Answer

A) No,because they were written from two different individuals. 
B) Probably not,because the checks will be drawn on banks within different Federal Reserve Bank areas,thus,the requirements for availability are different. 
C) Yes,because the UCC requires that all funds be available for use within twenty-four hours of deposit. 
D) Yes,because the checks will be drawn on the same bank. 
E) Yes,because they were deposited at the same time. 
A) No,because they were written from two different individuals. 
B) Probably not,because the checks will be drawn on banks within different Federal Reserve Bank areas,thus,the requirements for availability are different. 
C) Yes,because the UCC requires that all funds be available for use within twenty-four hours of deposit. 
D) Yes,because the checks will be drawn on the same bank. 
E) Yes,because they were deposited at the same time.

Question 11

Which of the following is an instrument whereby one party orders the second party to pay an amount of money to the party listed on the instrument?

Accepted Answer

A) An instrument. 
B) A draft. 
C) A note. 
D) A certificate of deposit. 
E) A mark. 
A) An instrument. 
B) A draft. 
C) A note. 
D) A certificate of deposit. 
E) A mark.

Question 12

The first bank that receives the check for payment is a[n] ________ bank.

Accepted Answer

A) Payer 
B) Payee 
C) Depositary 
D) Acceptor 
E) Transfer 
A) Payer 
B) Payee 
C) Depositary 
D) Acceptor 
E) Transfer

Question 13

The Federal Reserve has stated that Regulation E applies to e-money transactions.

Accepted Answer

A) True 
 B)False

Question 14

Arturo's bank tells him they have placed an eight-day hold on the funds.Arturo tells them they cannot do so.Is he correct?

Accepted Answer

A) No,if one of the checks was over $10,000. 
B) Yes,because they must make the funds available on the fifth business day following the day of deposit of the non-local check. 
C) Yes,because a depositary bank must release funds on the fifth business day after transfer to a Federal Reserve Bank. 
D) Yes,because they must make the funds available on the third business day following the day of deposit of the non-local check. 
E) No,if one of the checks was over $5,000. 
A) No,if one of the checks was over $10,000. 
B) Yes,because they must make the funds available on the fifth business day following the day of deposit of the non-local check. 
C) Yes,because a depositary bank must release funds on the fifth business day after transfer to a Federal Reserve Bank. 
D) Yes,because they must make the funds available on the third business day following the day of deposit of the non-local check. 
E) No,if one of the checks was over $5,000.

Question 15

Which of the following is false regarding checks?

Accepted Answer

A) In 2009,Americans wrote approximately 70 billion checks. 
B) Article 4 creates a framework controlling deposit and checking agreements between banks and customers;and when Articles 3 and 4 conflict,Article 4 is to take precedence. 
C) Checks are considered negotiable instruments under Article 3 of the UCC. 
D) Because of electronic fund transfers,checks are of little importance in the U.S.today. 
E) Of all the negotiable instruments regulated by the UCC,checks are the most common type used. 
A) In 2009,Americans wrote approximately 70 billion checks. 
B) Article 4 creates a framework controlling deposit and checking agreements between banks and customers;and when Articles 3 and 4 conflict,Article 4 is to take precedence. 
C) Checks are considered negotiable instruments under Article 3 of the UCC. 
D) Because of electronic fund transfers,checks are of little importance in the U.S.today. 
E) Of all the negotiable instruments regulated by the UCC,checks are the most common type used.

Question 16

If a customer does not notify the bank of an unauthorized signature within ________ days after the statement has been made available,she cannot hold the bank liable for the payment under the UCC.

Accepted Answer

A) 60 
B) 20 
C) 45 
D) 30 
E) 10 
A) 60 
B) 20 
C) 45 
D) 30 
E) 10

Question 17

Under the UCC,money orders are considered checks.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following governs consumer fund transactions in electronic fund transfers?

Accepted Answer

A) The Uniform Money Services Business Act of 1990. 
B) The Electronic Fund Transfer Act of 1978. 
C) The Automated Transfer Act of 1990. 
D) The Automated Fund Transfer Regulation of 2002. 
E) The Electronic Banking Act of 2000. 
A) The Uniform Money Services Business Act of 1990. 
B) The Electronic Fund Transfer Act of 1978. 
C) The Automated Transfer Act of 1990. 
D) The Automated Fund Transfer Regulation of 2002. 
E) The Electronic Banking Act of 2000.

Question 19

A[n] ________ is an institution created to facilitate the exchange of checks and drafts drawn by banks on one another,as well as to enable banks to settle their daily balances.

Accepted Answer

A) Acknowledging institution 
B) Approval institution 
C) Facilitating institution 
D) Transferring institution 
E) Clearinghouse 
A) Acknowledging institution 
B) Approval institution 
C) Facilitating institution 
D) Transferring institution 
E) Clearinghouse

Question 20

________ cards contain microchips for storing data that can be used to transfer funds.

Accepted Answer

A) Transfer 
B) Intel 
C) Smart 
D) Electronic 
E) Stored-value 
A) Transfer 
B) Intel 
C) Smart 
D) Electronic 
E) Stored-value

Exam 29: Checks and Electronic Fund Transfers

Did the bank properly dishonor the check to Rhea?

Which of the following is false regarding certified checks?

Who is responsible for the check to Kaleb?

Which statement is true about traveler's checks?

A bank involved in the check collection process may only be classified as one type of bank during the entire process.

Which of the following is true regarding parties who are related to an order?

Which of the following is true regarding what a bank may do to offer overdraft protection to customers?

Which statement is true regarding Pedro's statement that once the check had been dishonored,it could not be presented again?

Which of the following is an instrument whereby one party orders the second party to pay an amount of money to the party listed on the instrument?

The first bank that receives the check for payment is a[n] ________ bank.

The Federal Reserve has stated that Regulation E applies to e-money transactions.

Arturo's bank tells him they have placed an eight-day hold on the funds.Arturo tells them they cannot do so.Is he correct?

Which of the following is false regarding checks?

If a customer does not notify the bank of an unauthorized signature within ________ days after the statement has been made available,she cannot hold the bank liable for the payment under the UCC.

Under the UCC,money orders are considered checks.

Which of the following governs consumer fund transactions in electronic fund transfers?

A[n] ________ is an institution created to facilitate the exchange of checks and drafts drawn by banks on one another,as well as to enable banks to settle their daily balances.

________ cards contain microchips for storing data that can be used to transfer funds.

An Introduction to Dynamic Business Law

Business Ethics

The Uslegal System

Alternative Dispute Resolution

Constitutional Principles

International and Comparative Law

Crime and the Business Community

Tort Law

Negligence and Strict Liability

Product Liability

Liability of Accountants and Other Professionals

Intellectual Property

Introduction to Contracts

Agreement

Consideration

Capacity and Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title,risk of Loss,and Insurable Interest

Performance and Obligations Under Sales and Leases

Remedies for Breach of Sales and Lease Contracts

Warranties

Negotiable Instruments: Negotiability and Transferability

Negotiation, holder in Due Course, and Defenses

Liability, defenses, and Discharge

Secured Transactions

Other Creditors Remedies and Suretyship

Bankruptcy and Reorganization

Agency Formation and Duties

Liability to Third Parties and Termination

Forms of Business Organization

Partnerships: Nature, formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, officers, and Shareholders

Corporations: Mergers, consolidations, terminations

Corporations: Securities and Investor Protection

Employment and Labor Law

Employment Discrimination

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

The Nature of Property, personal Property, and Bailments

Real Property

Landlord-Tenant Law

Insurance Law

Wills and Trusts

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