Exam 29: Bank Deposits, Collections, and Funds Transfers

Doug takes a $500 check drawn by Gail to Gail's drawee bank to cash it. Gail has over $10,000 on deposit in her account. If her bank refuses to pay Doug:

Caryn deposits a check in her bank at 2:30 on Monday. The bank may, under the Code, treat the check as having been deposited on Tuesday for purposes of meeting the midnight deadline rule.

An association of banks created for the purpose of settling accounts with each other on a daily basis is a:

If a payor bank gives the provisional settlement as required, it has until the midnight deadline to return the item.

A written stop payment order is effective until revoked in writing.

If a bank receives a check on Tuesday, it must take proper action by midnight of Wednesday.

The Wall Street Reform and Consumer Protection Act of 2010 requires that the amount of any interchange transaction fee that an issuer may receive or charge with respect to an electronic debit transaction, including those on debit cards issued by small banks and prepaid reloadable cards, must be reasonable and proportional to the cost incurred by the issuer, as determined by the Federal Reserve.

Describe and summarize what happens during the collection process once a check is deposited in a customer's account. How does it get back to the drawee?

Which of the following is NOT a duty that a collecting bank has in the collection process?

A substitute check:

For how long is an oral stop payment order valid?

An oral stop payment order is binding on the payor bank for 14 calendar days.

The fact that a drawer has filed a stop payment order automatically relieves the drawer of liability on the underlying obligation.

The payor bank and the drawee bank are two separate banks.

A financial institution is liable to its customer if an electronic terminal has insufficient cash for a withdrawal of up to $100.

If you lose your wallet along with your bank ATM card, your liability is

Which warranties does a collecting bank give?

If Ben Stewart has a checking account at First Bank:

Each provisional settlement made in the collection chain is made final when the next bank takes the check.

MICR enables check processing without further human involvement.