Question 1

A paper check must be presented for payment-it cannot be retained at its place of deposit, with only its image or description presented electronically.

Accepted Answer

A) True 
 B)False

Question 2

Checks received after a certain time can be deferred for posting until the next banking day.

Accepted Answer

A) True 
 B)False

Question 3

With a joint checking account, the bank can hold any joint-account owner liable for payment of an overdraft even if that owner did not sign the check or benefit from its proceeds.

Accepted Answer

A) True 
 B)False

Question 4

Daisy signs a check "pay to the order of Ewan" drawn on Daisy's account in Finance Bank. Graham forges Ewan's indorsement. Finance Bank pays the check. Most likely

Accepted Answer

A)  Daisy will be liable for the amount.
B)  Ewan will have to pay Daisy for the amount.
C)  Finance Bank will have to recredit Daisy's account.
D)  the Federal Reserve will reimburse all parties for their costs.E) A) and C)
F) None of the above C

Question 5

Bok buys an espresso machine from Coffee Gadgets, which bills him for $100. He writes out a check drawn on Dios Bank, but later, believing that the machine is defective, issues a stop-payment order. Dios

Accepted Answer

A)  is liable to Coffee Gadgets for the amount of the check.
B)  must stop payment if the bank has a reasonable time to act.
C)  need not follow Bok's order because it was issued after the check.
D)  need not follow Bok's order unless the check was certified.E) A) and B)
F) A) and C)

Question 6

To avoid liability for negligence, a customer must examine monthly bank statements and canceled checks promptly and with reasonable care, and report any forged signatures to the bank.

Accepted Answer

A) True 
 B)False

Question 7

With respect to processing checks for payment, the Uniform Commercial Code governs the relationships of banks with

Accepted Answer

A)  their customers.
B)  the Federal Reserve.
C)  only other banks.
D)  all of the choices.E) B) and C)
F) A) and B)

Question 8

A bank may contractually shift to its customer the risk of forged checks created electronically or otherwise by the use non-manual signatures.

Accepted Answer

A) True 
 B)False

Question 9

Whoever takes an instrument with a forged indorsement cannot become a holder because a forged indorsement does not transfer title.

Accepted Answer

A) True 
 B)False  True

Question 10

Mara has a checking account at North Bank. Mara signs a check "payable to Ovid" drawn on Mara's account. North Bank is

Accepted Answer

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

Question 11

Elmer pays Fidelity Bank $1,000 plus a service fee to draw a check on itself made payable to Go Delivery Service. This is

Accepted Answer

A)  a cashier's check.
B)  an overdraft.
C)  a stale check.
D)  a stop-payment order.E) A) and B)
F) A) and C)

Question 12

If any financial institution, such as a brokerage house, handles a check for payment or collection, the check is covered by UCC Article 4.

Accepted Answer

A) True 
 B)False

Question 13

When a bank certifies a check, the bank is agreeing in advance to accept the check when it is presented for payment and to make payment with funds reserved for the purpose.

Accepted Answer

A) True 
 B)False

Question 14

Because issuing banks must honor cashier's checks when they are presented for payment, businesses sometimes use them as nearly the equivalent of cash.

Accepted Answer

A) True 
 B)False

Question 15

When a customer makes a deposit into a checking account, the customer becomes a debtor, and the bank a creditor, for the amount deposited.

Accepted Answer

A) True 
 B)False  False

Question 16

Ridge Bank creates a paper reproduction of customer Sophie's check with the statement "This is a legal copy of your check. You can use it in the same way you would use the original check." This is

Accepted Answer

A)  a certified check.
B)  a cashier's check.
C)  a substitute check.
D)  a traveler's check.E) B) and C)
F) C) and D)

Question 17

Erin uses e-money consisting of funds stored on microchips in her laptop, phone, and tablet to pay bills. This effectively replaces physical cash with virtual cash in the form of

Accepted Answer

A)  coins and paper currency.
B)  electronic impulses.
C)  checks.
D)  none of the choices.E) A) and B)
F) B) and C)

Question 18

Online payment systems are not yet among the most common types of electronic fund transfer systems.

Accepted Answer

A) True 
 B)False

Question 19

Electronic banking makes it easier to issue a stop-payment order.

Accepted Answer

A) True 
 B)False

Question 20

Brady forges Cal's signature on a check "payable to the order of Brady" drawn on Cal's account in Downtown Bank. Cal's forged signature is

Accepted Answer

A)  effective if an innocent third party accepts the check.
B)  effective to the degree that it matches Cal's genuine signature.
C)  effective to the extent that the bank debits Cal's account.
D)  not effective.E) C) and D)
F) B) and D)

Exam 28: Banking

A paper check must be presented for payment-it cannot be retained at its place of deposit, with only its image or description presented electronically.

Correct AnswerverifiedShow Answer

Checks received after a certain time can be deferred for posting until the next banking day.

Correct AnswerverifiedShow Answer

With a joint checking account, the bank can hold any joint-account owner liable for payment of an overdraft even if that owner did not sign the check or benefit from its proceeds.

Correct AnswerverifiedShow Answer

Daisy signs a check "pay to the order of Ewan" drawn on Daisy's account in Finance Bank. Graham forges Ewan's indorsement. Finance Bank pays the check. Most likely

Correct AnswerverifiedC

Bok buys an espresso machine from Coffee Gadgets, which bills him for $100. He writes out a check drawn on Dios Bank, but later, believing that the machine is defective, issues a stop-payment order. Dios

Correct AnswerverifiedShow Answer

To avoid liability for negligence, a customer must examine monthly bank statements and canceled checks promptly and with reasonable care, and report any forged signatures to the bank.

Correct AnswerverifiedShow Answer

With respect to processing checks for payment, the Uniform Commercial Code governs the relationships of banks with

Correct AnswerverifiedShow Answer

A bank may contractually shift to its customer the risk of forged checks created electronically or otherwise by the use non-manual signatures.

Correct AnswerverifiedShow Answer

Whoever takes an instrument with a forged indorsement cannot become a holder because a forged indorsement does not transfer title.

Correct AnswerverifiedTrue

Mara has a checking account at North Bank. Mara signs a check "payable to Ovid" drawn on Mara's account. North Bank is

Correct AnswerverifiedShow Answer

Elmer pays Fidelity Bank $1,000 plus a service fee to draw a check on itself made payable to Go Delivery Service. This is

Correct AnswerverifiedShow Answer

If any financial institution, such as a brokerage house, handles a check for payment or collection, the check is covered by UCC Article 4.

Correct AnswerverifiedShow Answer

When a bank certifies a check, the bank is agreeing in advance to accept the check when it is presented for payment and to make payment with funds reserved for the purpose.

Correct AnswerverifiedShow Answer

Because issuing banks must honor cashier's checks when they are presented for payment, businesses sometimes use them as nearly the equivalent of cash.

Correct AnswerverifiedShow Answer

When a customer makes a deposit into a checking account, the customer becomes a debtor, and the bank a creditor, for the amount deposited.

Correct AnswerverifiedFalse

Ridge Bank creates a paper reproduction of customer Sophie's check with the statement "This is a legal copy of your check. You can use it in the same way you would use the original check." This is

Correct AnswerverifiedShow Answer

Erin uses e-money consisting of funds stored on microchips in her laptop, phone, and tablet to pay bills. This effectively replaces physical cash with virtual cash in the form of

Correct AnswerverifiedShow Answer

Online payment systems are not yet among the most common types of electronic fund transfer systems.

Correct AnswerverifiedShow Answer

Electronic banking makes it easier to issue a stop-payment order.

Correct AnswerverifiedShow Answer

Brady forges Cal's signature on a check "payable to the order of Brady" drawn on Cal's account in Downtown Bank. Cal's forged signature is

Correct AnswerverifiedShow Answer

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C

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True

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False

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