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

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. -In the above banking transaction, Cameron and Associates is the ________.

A deposit of cash to an account becomes available for withdrawal at the opening of the next banking day following the deposit.

If there are major failures of several large banks or many small banks, and the FDIC insurance fund is insufficient to cover all of the depositors' losses, which of the following bodies is responsible for paying the depositors money owed by the FDIC?

If a checking account customer fails to report a series of forgeries or alterations by the same wrongdoer on the same account within 30 days from receiving the monthly statement of account, then the bank is discharged from liability on all similar forged or altered checks after that date and prior to notification.

The check collection process, which may involve multiple banks, is governed by Revised Article 3 of the UCC.

Checks are the most common form of negotiable instruments used in the United States.

When a bank pays the holder of a properly drawn check, it is said to have ________ the check.

A check that has been modified without authorization and thus modifies the legal obligation of a party is known as a(n)________.

Which of the following describes a situation in which a collecting bank gives credit to a check in the collection process prior to its final settlement?

Francis Jeffers purchased a cashier's check in the amount of $5, 000 from Northern Star Bank.The check was made payable to Kyle Naughton and was delivered to him.Twelve months later, the Northern Star Bank branch manager informed Jeffers that the cashier's check was still outstanding.Jeffers subsequently signed a form, requesting that payment be stopped and a replacement check be issued.Northern Star Bank issued a replacement check to Jeffers.Eight months later, Naughton deposited the original cashier's check in his bank, which was paid by Northern Star Bank.Northern Star Bank requested that Jeffers repay the bank $5, 000.When he refused, Northern Star Bank sued Jeffers to recover this amount and the court awarded Northern Star Bank damages amounting to $5, 500. Which of the following, had it happened, would have resulted in the court ruling in Jeffers' favor?

A(n)________ is an order by the drawer to the drawee bank to pay a specified sum of money from the drawer's checking account to the named payee (or holder).

A checking account customer owes a duty to examine the monthly statements of account promptly and with reasonable care to determine whether any payment was not authorized because of alteration of a check or a forged signature.

According to the Electronic Funds Transfer Act and Regulation E adopted by the Federal Reserve Board, a bank can send unsolicited EFTS debit cards to a consumer only if the cards are not valid for use.

Which of the following is implied when a bank certifies a check?

If there are major failures of several large banks or many small banks, and the FDIC insurance fund is insufficient to cover all of the depositors' losses, then the U.S.government will pay the depositors the money owed by the FDIC.

Timothy is owed $1, 000 by Greg, who gives him a check to repay the amount.When Timothy presents it at Greg's bank five months later, however, the bank refuses to pay the check.The bank was willing to act in good faith, but is not liable for the dishonor of the check.Which of the following, if true, would explain the dishonor of the check by Greg's bank?

The drawer's failure to report a forged or altered check to the bank within six months of receiving the bank statement and canceled checks containing it relieves the bank of any liability for paying the instrument.

Article 4A of the Uniform Commercial Code establishes the ________.

The payee of a check can indorse it to a third person by replacing his name on the check with that of the third party.

Which of the following is one of the provisions of the Electronic Funds Transfer Act and Regulation E of the Federal Reserve Board?