Exam 25: Banks, E-Money, and Financial Reform

If the drawer and the payee of a check have accounts at the same bank, the check is called an "on them" item when it is presented for payment by the payee.

It is not necessary to have a checking account at the issuing bank to purchase a cashier's check.

Which of the following statements is true of certified checks?

A presentment warranty is a guarantee in which each prior transferor warrants that a check has not been altered.

George, John, Paul, Ringo, and Brian are five friends from Iowa.George owes John $100, John owes Paul $200, Paul owes Ringo $300, and Ringo owes Brian $400.John and Paul find a check belonging to George.John names himself as the payee on the check, fills in $200 as the amount, and forges George's signature on it.He indorses the check to Paul and asks him to consider his debt repaid, while keeping the knowledge of the forgery to himself.Paul, in turn, indorses the check to Ringo and pays Ringo the remaining $100 in cash.Predictably, Ringo indorses the check to Brian, who presents the check to George's bank and receives payment.Who among the following friends can the bank recover the money from, once the forgery is detected?

When the drawee bank receives a properly drawn and payable check, the bank is under a duty to honor the check and charge (debit)the drawer's account the amount of the check if there are sufficient funds in the customer's checking account at the bank.

If a drawer and a payee or holder have accounts at different banks, the payer bank and depository bank are not the same bank.In this case, the check is called a(n)________.

A cashier's check is a two-party check.

The Dodd-Frank Wall Street Reform and Consumer Protection Act grants powers to the Federal Reserve to monitor and regulate institutions it supervises, including bank holding companies, savings bank holding companies, and affiliates of holding companies.

A stop-payment order can be issued either by the drawer or the payee.

Jill Scott is an accountant with Cameron and Associates, a law firm in downtown Seattle.The firm maintains a checking account with Southern Rock Bank for its operating expenses.On the 10^th of every month, Jill gets an inventory report from the office manager listing the office supplies that are needed.Jill places the appropriate orders with Office Depot and writes them a check against the office's checking account. -Who is the drawee in this banking transaction?

If the drawer does not have enough money in his or her account when a properly payable check is presented for payment, the payer bank is obligated to honor the check and create an overdraft in the drawer's account.

Raj receives a check for $100 from Sheldon.He signs the back of the check and turns it over to Leo to pay off the $100 he owed Leo. -In this case, Raj is the ________.

The term ________ refers to the computer and electronic technology that makes it possible for banks to offer electronic payment and collection systems to bank customers.

The drawee is the party to whom a check is written.

Which of the following is an accurate description of wrongful dishonor of a check?

The ________ is a federal statute, enacted by the Congress in 2010, that reorganizes federal government supervision of the banking system, regulates previous unregulated financial products and institutions, and adds a new consumer protection agency to protect consumers from abusive lending and banking practices.

The ________ is a government agency that insures deposits at most banks and savings institutions in the United States.

A check is finally paid when the payer bank fails to dishonor the check within certain statutory time periods.

If a customer notifies the issuing bank within two days of learning that his or her debit card has been lost or stolen, the customer is liable for only $100 for unauthorized use.