Question 1

For how long is a written stop payment order valid?

Accepted Answer

A) One month 
B) Six weeks 
C) Six months 
D) One year 
A) One month 
B) Six weeks 
C) Six months 
D) One year

Question 2

If First Bank receives a check for collection on Friday at 4 p.m., it must present the check to the payor bank by midnight Saturday.

Accepted Answer

A) True 
 B)False

Question 3

Cheryl writes checks totaling $200, but she has only $100 in her account.Check #101 is for $50; #102 is for $75; #103 is for $25; and #104 is for $50.All of the checks reach the bank on the same day.In what order should the bank charge them?

Accepted Answer

A) Under Article 4, it must charge them in the order in which they were drawn. 
B) It must call the customer to ask which items should be paid. 
C) The bank may pay them in any order it deems convenient. 
D) The bank must dishonor all of the checks. 
A) Under Article 4, it must charge them in the order in which they were drawn. 
B) It must call the customer to ask which items should be paid. 
C) The bank may pay them in any order it deems convenient. 
D) The bank must dishonor all of the checks.

Question 4

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

Accepted Answer

A) unlimited unless you notify the bank within 30 days. 
B) limited to $200 if you notify the bank within 2 days. 
C) limited to $500 if you notify the bank within 2 days. 
D) limited to $50 if you notify the bank within 2 days. 
A) unlimited unless you notify the bank within 30 days. 
B) limited to $200 if you notify the bank within 2 days. 
C) limited to $500 if you notify the bank within 2 days. 
D) limited to $50 if you notify the bank within 2 days.

Question 5

Wholesale electronic funds transfers:

Accepted Answer

A) are also called wholesale wire transfers. 
B) involve the transfer of more than one trillion dollars each business day. 
C) use Fedwire, CHIPS, and numerous private wire systems. 
D) All of these. 
A) are also called wholesale wire transfers. 
B) involve the transfer of more than one trillion dollars each business day. 
C) use Fedwire, CHIPS, and numerous private wire systems. 
D) All of these.

Question 6

Montey receives his monthly bank statement on December 30th.He looks at it quickly, then sets it aside.Three days later, he examines it again and discovers a forged check.What must he do to avoid responsibility for the check? Cite Code provisions.

Accepted Answer

He must notify the bank promptly, in a r

Question 7

Check 21 permits banks to remove an original paper check from the check collection process and send instead a substitute check.

Accepted Answer

A) True 
 B)False

Question 8

Helen deposits a $50 check in her account at First Bank at 4:00 on Friday.The bank is closed on Saturday and Sunday, but opens again on Monday.The midnight deadline for First Bank would be:

Accepted Answer

A) Midnight Saturday 
B) Midnight Sunday 
C) Midnight Monday 
D) Midnight Tuesday 
A) Midnight Saturday 
B) Midnight Sunday 
C) Midnight Monday 
D) Midnight Tuesday

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

What Article of the UCC governs electronic funds transfers?

Accepted Answer

A) Article 3 
B) Article 4 
C) Article 4A 
D) Article 5 
A) Article 3 
B) Article 4 
C) Article 4A 
D) Article 5

Question 11

Banks like electronic funds transfers because they eliminate the float time that a drawer enjoys on a checking account and the paperwork involved in processing checks.

Accepted Answer

A) True 
 B)False

Question 12

What is electronic funds transfer? Why do banks like it? What provisions are in the law to protect the customer who uses electronic funds transfer?

Accepted Answer

EFTs are any transfers of funds, other t

Question 13

The desired effect of EFTS is to:

Accepted Answer

A) avoid the delay between issuance of a check and receiving the canceled check. 
B) eliminate errors. 
C) ease the mobility of society. 
D) both avoid the delay between issuance of a check and final payment, and also to eliminate paperwork. 
A) avoid the delay between issuance of a check and receiving the canceled check. 
B) eliminate errors. 
C) ease the mobility of society. 
D) both avoid the delay between issuance of a check and final payment, and also to eliminate paperwork.

Question 14

Which of the following is correct with respect to a bank customer's duty to discover and report unauthorized signatures?

Accepted Answer

A) The customer is required to exercise reasonable promptness in examining the bank statement. 
B) This duty of examination includes the signatures of payees or indorsers. 
C) The bank is liable on all items with unauthorized signatures even if these canceled checks were returned to the customer four years prior to the discovery of the alterations. 
D) The bank customer must report an unauthorized indorsement within one year of its occurrence. 
A) The customer is required to exercise reasonable promptness in examining the bank statement. 
B) This duty of examination includes the signatures of payees or indorsers. 
C) The bank is liable on all items with unauthorized signatures even if these canceled checks were returned to the customer four years prior to the discovery of the alterations. 
D) The bank customer must report an unauthorized indorsement within one year of its occurrence.

Question 15

A payor bank is under an obligation to pay an uncertified check that is nine months old.

Accepted Answer

A) True 
 B)False

Question 16

Under the Competitive Equality Banking Act, a nonlocal check must clear in no more than four intervening business days.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) payor banking group. 
B) clearinghouse. 
C) provisional reserve. 
D) None of these. 
A) payor banking group. 
B) clearinghouse. 
C) provisional reserve. 
D) None of these.

Question 18

Sylvia deposits a $50 check drawn on Valley Bank into her account at First Bank.First Bank transfers the check to Second Bank, which in turn forwards it to Valley Bank, which pays the item.Which of the following is correct?

Accepted Answer

A) Valley Bank is the payor bank and the drawee bank. 
B) Valley Bank is the drawee bank and the collecting bank. 
C) Valley Bank is the payor bank and the collecting bank. 
D) Valley Bank is the payor bank, the drawee bank and the collecting bank. 
A) Valley Bank is the payor bank and the drawee bank. 
B) Valley Bank is the drawee bank and the collecting bank. 
C) Valley Bank is the payor bank and the collecting bank. 
D) Valley Bank is the payor bank, the drawee bank and the collecting bank.

Question 19

Under Article 3 of the Code, collecting banks give to a transferee the same basic warranties as those given by other parties who transfer commercial paper.

Accepted Answer

A) True 
 B)False

Question 20

A substitute check:

Accepted Answer

A) is basically a copy of the original check that shows both the front and back of the original check. 
B) is not suitable for automated processing in the same manner as the original but is used by the banks for storage of the information on an original check after processing. 
C) bears a legend stating that it is only a copy of a check and that it is not to be used in the same way as the original. 
D) All of these. 
A) is basically a copy of the original check that shows both the front and back of the original check. 
B) is not suitable for automated processing in the same manner as the original but is used by the banks for storage of the information on an original check after processing. 
C) bears a legend stating that it is only a copy of a check and that it is not to be used in the same way as the original. 
D) All of these.

Exam 29: Bank Deposits, Collections, and Funds Transfers

For how long is a written stop payment order valid?

If First Bank receives a check for collection on Friday at 4 p.m., it must present the check to the payor bank by midnight Saturday.

Cheryl writes checks totaling $200, but she has only $100 in her account.Check #101 is for $50; #102 is for $75; #103 is for $25; and #104 is for $50.All of the checks reach the bank on the same day.In what order should the bank charge them?

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

Wholesale electronic funds transfers:

Montey receives his monthly bank statement on December 30th.He looks at it quickly, then sets it aside.Three days later, he examines it again and discovers a forged check.What must he do to avoid responsibility for the check? Cite Code provisions.

Check 21 permits banks to remove an original paper check from the check collection process and send instead a substitute check.

Helen deposits a $50 check in her account at First Bank at 4:00 on Friday.The bank is closed on Saturday and Sunday, but opens again on Monday.The midnight deadline for First Bank would be:

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

What Article of the UCC governs electronic funds transfers?

Banks like electronic funds transfers because they eliminate the float time that a drawer enjoys on a checking account and the paperwork involved in processing checks.

What is electronic funds transfer? Why do banks like it? What provisions are in the law to protect the customer who uses electronic funds transfer?

The desired effect of EFTS is to:

Which of the following is correct with respect to a bank customer's duty to discover and report unauthorized signatures?

A payor bank is under an obligation to pay an uncertified check that is nine months old.

Under the Competitive Equality Banking Act, a nonlocal check must clear in no more than four intervening business days.

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

Sylvia deposits a $50 check drawn on Valley Bank into her account at First Bank.First Bank transfers the check to Second Bank, which in turn forwards it to Valley Bank, which pays the item.Which of the following is correct?

Under Article 3 of the Code, collecting banks give to a transferee the same basic warranties as those given by other parties who transfer commercial paper.

A substitute check:

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature, Formation, and Powers

Financial Structure

Management Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection

Employment Law

Securities Regulation

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

51: The Legal Environment Of Business

52: Contracts.

53: Agency.

54: Sales

55: Negotiable Instruments

56: Unincorporated Business Association

57: Corporations

58: Debtor and Creditor Relation

59: Regulation of Business

60: Property.