Question 1

A written stop-payment order is effective for one (1)year.

Accepted Answer

A) True 
 B)False  False

Question 2

Only the drawer can order a stop-payment order.

Accepted Answer

A) True 
 B)False  True

Question 3

A(n)________ check is a two-party check for which (1)the issuing bank serves as both the drawer and the drawee and (2)the holder serves as payee.

Accepted Answer

A)  certified 
B)  accepted 
C)  cashier's 
D)  dishonored 
E)  ratified 
A)  certified 
B)  accepted 
C)  cashier's 
D)  dishonored 
E)  ratified C

Question 4

The issuing bank serves as both the drawer and drawee of a cashier's check.

Accepted Answer

A) True 
 B)False

Question 5

Fiora has a checking account at Big Bank.She writes a check on her account to Lisa,who submits the check to Food Stuff to buy groceries.Food Stuff obtains payment on the check from Big Bank.Which of the following is true?

Accepted Answer

A)  Fiora is the drawer, Lisa is the payee, Lisa is the indorser, Food Stuff is the indorsee, and Big Bank is the drawee. 
B)  Fiora is the drawer, Lisa is the drawee, Lisa is the indorser, Food Stuff is the indorsee, and Big Bank is the payee. 
C)  Fiora is the drawee, Lisa is the drawer, Lisa is the indorser, Food Stuff is the indorsee, and Big Bank is the payee. 
D)  Fiora is the indorsee, Lisa is the payee, Lisa is the indorser, Food Stuff is the indorsee, and Big Bank is the drawer. 
E)  Fiora is the drawee, Lisa is the payee, Lisa is the indorser, Food Stuff is the indorsee, and Big Bank is the drawer. 
A)  Fiora is the drawer, Lisa is the payee, Lisa is the indorser, Food Stuff is the indorsee, and Big Bank is the drawee. 
B)  Fiora is the drawer, Lisa is the drawee, Lisa is the indorser, Food Stuff is the indorsee, and Big Bank is the payee. 
C)  Fiora is the drawee, Lisa is the drawer, Lisa is the indorser, Food Stuff is the indorsee, and Big Bank is the payee. 
D)  Fiora is the indorsee, Lisa is the payee, Lisa is the indorser, Food Stuff is the indorsee, and Big Bank is the drawer. 
E)  Fiora is the drawee, Lisa is the payee, Lisa is the indorser, Food Stuff is the indorsee, and Big Bank is the drawer.

Question 6

When a bank ________ a check,it agrees in advance (1)to accept the check when it is presented for payment and (2)to pay the check out of funds set aside from the customer's account.

Accepted Answer

A)  ratifies 
B)  acknowledges 
C)  certifies 
D)  notarizes 
E)  processes 
A)  ratifies 
B)  acknowledges 
C)  certifies 
D)  notarizes 
E)  processes

Question 7

A check that has been outstanding for more than three (3)months is considered "stale."

Accepted Answer

A) True 
 B)False

Question 8

The purchaser of a cashier's check is not required to have a checking account at the issuing bank.

Accepted Answer

A) True 
 B)False

Question 9

When a customer deposits a check into a checking account for collection,the depository bank does not have to pay the customer the amount of the check until the check "clears," which is when final settlement occurs.

Accepted Answer

A) True 
 B)False

Question 10

Article 3 of the Uniform Commercial Code establishes the rules and principles that regulate bank deposit and collection procedures for checking accounts offered by commercial banks.

Accepted Answer

A) True 
 B)False

Question 11

The Federal Reserve System,which consists of ________ regional Federal Reserve banks located in different geographical areas of the country,assists banks in the collection of checks.

Accepted Answer

A)  six (6) 
B)  twelve (12) 
C)  twenty (20) 
D)  twenty-one (21) 
E)  fifty (50) 
A)  six (6) 
B)  twelve (12) 
C)  twenty (20) 
D)  twenty-one (21) 
E)  fifty (50)

Question 12

Which of the following banks are the same bank regarding an "on us" item?

Accepted Answer

A)  the depository and the payer 
B)  the payee and intermediary 
C)  the collecting and intermediary 
D)  the payee and depository 
E)  the payee and collecting 
A)  the depository and the payer 
B)  the payee and intermediary 
C)  the collecting and intermediary 
D)  the payee and depository 
E)  the payee and collecting

Question 13

Banks must credit all customers' deposits to their accounts on the same day that the deposits are received.

Accepted Answer

A) True 
 B)False

Question 14

An obligated bank that wrongfully refuses to pay a cashier's check is liable to the person who asserts the right to enforce the check for expenses,loss of interest resulting from non-payment,and consequential damages.

Accepted Answer

A) True 
 B)False

Question 15

On January 2,2011,Currier writes a check to Ives in the amount of $5,000 to pay a debt.He accidentally writes January 2,2010 on the check.The next day he has a fight with Ives; after the confrontation,he realizes the date error,so he figures that the mistake will make the instrument non-negotiable.Is he right? What will likely happen if Ives presents the check to the drawee for payment on January 3,2011?

Accepted Answer

Currier is wrong.Normally,a check dated

Question 16

If a bank pays a check with a forged drawer's signature,the bank has a duty to credit the drawer's account if given timely notification.

Accepted Answer

A) True 
 B)False

Question 17

________ credit is a situation in which a collecting bank gives credit to a check in the collection process prior to its final settlement.

Accepted Answer

A)  Provisional 
B)  Conditional 
C)  Certified 
D)  Accommodating 
E)  Deferential 
A)  Provisional 
B)  Conditional 
C)  Certified 
D)  Accommodating 
E)  Deferential

Question 18

When a check is certified,the certification acts as a discharge regarding the drawer's liability on the check.

Accepted Answer

A) True 
 B)False

Question 19

When a wire transfer is involved,what happens if a receiving bank mistakenly pays a greater amount to the beneficiary than ordered?

Accepted Answer

A)  The originator is liable for the entire amount paid, and has no right of recovery. 
B)  The originator is liable for the entire amount paid, but may recover only from the person or company who ordered the wire transfer. 
C)  The originator is liable for the entire amount, but may recover only from the improper beneficiary. 
D)  The originator is liable for only the amount he or she instructed to be paid. 
E)  The originator is not liable for any amount, and the transaction is void. 
A)  The originator is liable for the entire amount paid, and has no right of recovery. 
B)  The originator is liable for the entire amount paid, but may recover only from the person or company who ordered the wire transfer. 
C)  The originator is liable for the entire amount, but may recover only from the improper beneficiary. 
D)  The originator is liable for only the amount he or she instructed to be paid. 
E)  The originator is not liable for any amount, and the transaction is void.

Question 20

With a certified check,the certification expires when the check becomes stale.

Accepted Answer

A) True 
 B)False

Exam 22: Banking System, E-Money, and Financial Reform

A written stop-payment order is effective for one (1)year.

Only the drawer can order a stop-payment order.

A(n)________ check is a two-party check for which (1)the issuing bank serves as both the drawer and the drawee and (2)the holder serves as payee.

The issuing bank serves as both the drawer and drawee of a cashier's check.

Fiora has a checking account at Big Bank.She writes a check on her account to Lisa,who submits the check to Food Stuff to buy groceries.Food Stuff obtains payment on the check from Big Bank.Which of the following is true?

When a bank ________ a check,it agrees in advance (1)to accept the check when it is presented for payment and (2)to pay the check out of funds set aside from the customer's account.

A check that has been outstanding for more than three (3)months is considered "stale."

The purchaser of a cashier's check is not required to have a checking account at the issuing bank.

When a customer deposits a check into a checking account for collection,the depository bank does not have to pay the customer the amount of the check until the check "clears," which is when final settlement occurs.

Article 3 of the Uniform Commercial Code establishes the rules and principles that regulate bank deposit and collection procedures for checking accounts offered by commercial banks.

The Federal Reserve System,which consists of ________ regional Federal Reserve banks located in different geographical areas of the country,assists banks in the collection of checks.

Which of the following banks are the same bank regarding an "on us" item?

Banks must credit all customers' deposits to their accounts on the same day that the deposits are received.

An obligated bank that wrongfully refuses to pay a cashier's check is liable to the person who asserts the right to enforce the check for expenses,loss of interest resulting from non-payment,and consequential damages.

If a bank pays a check with a forged drawer's signature,the bank has a duty to credit the drawer's account if given timely notification.

________ credit is a situation in which a collecting bank gives credit to a check in the collection process prior to its final settlement.

When a check is certified,the certification acts as a discharge regarding the drawer's liability on the check.

When a wire transfer is involved,what happens if a receiving bank mistakenly pays a greater amount to the beneficiary than ordered?

With a certified check,the certification expires when the check becomes stale.

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