Question 1

The destruction of an original check after the creation of a substitute check prevents the check from being paid twice.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) one day. 
B) one year. 
C) one month. 
D) six months.

Question 3

A customer's negligence cannot shift the loss when payment is made on a check with an altered amount.

Accepted Answer

A) True 
 B)False

Question 4

The contractual rights and duties of the bank and the customer depend on the nature of the transaction.

Accepted Answer

A) True 
 B)False

Question 5

Franco buys a sofa from Grey at a garage sale. Franco writes Grey a check for $50 to pay for the couch. Grey is

Accepted Answer

A) none of the choices. 
B) the drawee. 
C) the drawer. 
D) the payee.

Question 6

Bern signs a check "pay to the order of College Bookstore" drawn on his account at Debit Bank to buy textbooks. Bern is

Accepted Answer

A) none of the choices. 
B) the drawee. 
C) the drawer. 
D) the payee.

Question 7

Allys writes a check to Beri on Allys' account at Community Bank. The bank dishonors the check even though Allys has sufficient funds in her account. The bank is liable to

Accepted Answer

A) Allys. 
B) Beri. 
C) the payee on Ally's next check. 
D) no one.

Question 8

Nan writes a check for $1,000 drawn on Omni Bank payable to Posy. Posy presents the check for payment to Omni Bank, which dishonors it. The party most likely liable to Posy is

Accepted Answer

A) Nan in a civil suit. 
B) Nan in a criminal prosecution. 
C) Omni Bank in a civil suit. 
D) none of the choices.

Question 9

Dana draws a check on Equity Bank, and asks the bank to agree in advance to accept the check by setting aside sufficient funds to cover the amount. If Equity agrees, the check will be considered

Accepted Answer

A) cashed. 
B) certified. 
C) deposited. 
D) provisionally credited.

Question 10

The bank on which a check is drawn is the depositary bank .

Accepted Answer

A) True 
 B)False

Question 11

Smith & Jones P.A. is a business customer of Tri-State Bank. Under federal law, Smith & Jones cannot demand

Accepted Answer

A) any proof of payment except the bank's good faith. 
B) monthly statements. 
C) recrediting of its account on payment of a forged item. 
D) the return of its original checks with its monthly statements.

Question 12

On an automated teller machine (ATM)belonging to USA Bank, Sven placed a card-skimming device to pull information from the magnetic strips of users' debit cards. The device then transmitted the stolen data to thieves who used it to gain access to, and empty, the bank accounts of the users, including Megan. Megan learned of the theft the next day and promptly notified USA. Is Megan entitled to a recredit of her account for the most of the loss due to the theft? Explain.

Accepted Answer

The answer of On an automated teller machine (ATM)belonging to...

Question 13

Nick steals two checks from Pauline-a blank check and a check payable to the order of Retail Outlets Company, drawn on Pauline's account with State Bank. Nick forges Pauline's signature on the blank check and makes it payable to himself. Nick forges Retail Outlets' indorsement on the back of the check payable to Retail Outlets, and adds, "Pay to the order of Nick." At United Credit Union, Nick indorses the back of both checks with his own name and gives them to United for cash. United does not know about the theft or the forged signatures and presents the checks to State Bank, which pays them. Pauline, who was not negligent, discovers the forgeries and asks State Bank to recredit her account. Who suffers the loss on each check?

Accepted Answer

The answer of Nick steals two checks from Pauline-a blank...

Question 14

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

Accepted Answer

A) any party to whom a subsequent check was written. 
B) Kobe. 
C) Liu. 
D) Main Street Bank.

Question 15

Dallas presents an uncertified check for payment more than six months after its date. The check was drawn by Emma on her account in First Bank. If the bank follows the usual banking practice in such a case, it will

Accepted Answer

A) cash the check. 
B) consult Emma. 
C) refuse to cash the check. 
D) ask Dallas what he would prefer.

Question 16

A bank is not obligated to pay an uncertified check presented for payment more than six months from its date.

Accepted Answer

A) True 
 B)False

Question 17

If any part of a commercial electronic fund transfer is covered by the Electronic Fund Transfer Act, the entire transaction is excluded from UCC Article 4A.

Accepted Answer

A) True 
 B)False

Question 18

If a bank does not dishonor an "on-us" item by the opening of the second banking day following its receipt, the check is considered paid.

Accepted Answer

A) True 
 B)False

Question 19

Quito writes a check to Roy on Quito's account at Sterling Bank. The bank dishonors the check because Quito has insufficient funds in his account. The bank is liable to

Accepted Answer

A) Quito. 
B) Roy. 
C) Quito, Roy, and the payees on Quito's subsequent checks. 
D) no one.

Question 20

Gary writes a check drawn on Hill Bank for $400 "payable to Ian" on May 1. Gary dies on May 3. Ian presents the check to the bank on May 5. Unaware of Gary's death, the bank

Accepted Answer

A) must certify the check. 
B) may pay the check. 
C) must consult with Gary's heirs before paying the check. 
D) can do nothing until Ian claims an interest in the account.

Exam 28: Banking

The destruction of an original check after the creation of a substitute check prevents the check from being paid twice.

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

A customer's negligence cannot shift the loss when payment is made on a check with an altered amount.

The contractual rights and duties of the bank and the customer depend on the nature of the transaction.

Franco buys a sofa from Grey at a garage sale. Franco writes Grey a check for $50 to pay for the couch. Grey is

Bern signs a check "pay to the order of College Bookstore" drawn on his account at Debit Bank to buy textbooks. Bern is

Allys writes a check to Beri on Allys' account at Community Bank. The bank dishonors the check even though Allys has sufficient funds in her account. The bank is liable to

Nan writes a check for $1,000 drawn on Omni Bank payable to Posy. Posy presents the check for payment to Omni Bank, which dishonors it. The party most likely liable to Posy is

Dana draws a check on Equity Bank, and asks the bank to agree in advance to accept the check by setting aside sufficient funds to cover the amount. If Equity agrees, the check will be considered

The bank on which a check is drawn is the depositary bank .

Smith & Jones P.A. is a business customer of Tri-State Bank. Under federal law, Smith & Jones cannot demand

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

Dallas presents an uncertified check for payment more than six months after its date. The check was drawn by Emma on her account in First Bank. If the bank follows the usual banking practice in such a case, it will

A bank is not obligated to pay an uncertified check presented for payment more than six months from its date.

If any part of a commercial electronic fund transfer is covered by the Electronic Fund Transfer Act, the entire transaction is excluded from UCC Article 4A.

If a bank does not dishonor an "on-us" item by the opening of the second banking day following its receipt, the check is considered paid.

Quito writes a check to Roy on Quito's account at Sterling Bank. The bank dishonors the check because Quito has insufficient funds in his account. The bank is liable to

Gary writes a check drawn on Hill Bank for $400 "payable to Ian" on May 1. Gary dies on May 3. Ian presents the check to the bank on May 5. Unaware of Gary's death, the bank