Question 1

The Code imposes certain affirmative duties on bank customers and fixes time limits within which they must assert their rights.

Accepted Answer

A) True 
 B)False

Question 2

A depositary bank is any bank handling an item for payment.

Accepted Answer

A) True 
 B)False

Question 3

ABC Bank sent Joanne, a depositor, her January statement on January 31. Within what length of time after this date will Joanne have to notify ABC bank of any instruments containing alterations or unauthorized signatures included in her January statement?

Accepted Answer

A)  10 days. 
B)  A reasonable period of time, not to exceed 30 days. 
C)  60 days. 
D)  Three years. 
A)  10 days. 
B)  A reasonable period of time, not to exceed 30 days. 
C)  60 days. 
D)  Three years.

Question 4

A written stop payment order is effective indefinitely.

Accepted Answer

A) True 
 B)False

Question 5

A provisional credit occurs at the time a depositary bank permits a customer to draw funds against the deposited check.

Accepted Answer

A) True 
 B)False

Question 6

A check is drawn on Jones Bank by Tamara and made payable to the order of Chris. Chris indorses it "for deposit only, Acct. 2275, Chris" and gives it to Plainer Bank for deposit. Plainer stamps "pay any bank" on the check along with its indorsement and negotiates it to Stone Bank. Stone Bank simply stamps "Stone Bank" and negotiates it to SmallTown Bank. If SmallTown wants to negotiate it to the electric company to pay its bill, can it?

Accepted Answer

A)  Yes, because the restrictive indorsement only applied to earlier indorsees. 
B)  Yes, because the bank was not responsible for checking more than one indorsement. 
C)  No, because an item restrictively indorsed with words such as "pay any bank" is locked into the bank collection system. 
D)  No, because the bank must issue its own check for its own bills. 
A)  Yes, because the restrictive indorsement only applied to earlier indorsees. 
B)  Yes, because the bank was not responsible for checking more than one indorsement. 
C)  No, because an item restrictively indorsed with words such as "pay any bank" is locked into the bank collection system. 
D)  No, because the bank must issue its own check for its own bills.

Question 7

Which of the following is true of a collecting bank?

Accepted Answer

A)  A collecting bank is an agent of the owner of an item only after settlement becomes final. 
B)  The relationship between a collecting bank and the owner of an item, once settled, becomes a debtor-creditor relationship. 
C)  A collecting bank may not be a sub-agent of the owner until settlement becomes final. 
D)  Collecting banks must give substantially more  warranties  than those given by parties under Article 3 upon presentment and transfer. 
A)  A collecting bank is an agent of the owner of an item only after settlement becomes final. 
B)  The relationship between a collecting bank and the owner of an item, once settled, becomes a debtor-creditor relationship. 
C)  A collecting bank may not be a sub-agent of the owner until settlement becomes final. 
D)  Collecting banks must give substantially more  warranties  than those given by parties under Article 3 upon presentment and transfer.

Question 8

A check drawn on a bank is an order to pay a sum of money and an authorization to charge the amount to the drawer's account. The drawer may countermand this order by which of the following?

Accepted Answer

A)  A canceled check. 
B)  A stop payment order. 
C)  A banker's acceptance. 
D)  A time draft. 
A)  A canceled check. 
B)  A stop payment order. 
C)  A banker's acceptance. 
D)  A time draft.

Question 9

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

Accepted Answer

A)  Duty of care. 
B)  Duty to act in a timely manner. 
C)  Duty to honor a valid stop payment order. 
D)  Duty to honor a restrictive endorsement. 
A)  Duty of care. 
B)  Duty to act in a timely manner. 
C)  Duty to honor a valid stop payment order. 
D)  Duty to honor a restrictive endorsement.

Question 10

Congress enacted the Truth in Savings Act which requires all depositary banks to disclose in great detail to consumers the terms and conditions of their deposit accounts.

Accepted Answer

A) True 
 B)False

Question 11

If Ben Stewart has a checking account at Green National Bank:

Accepted Answer

A)  the relationship between Ben and his bank is based primarily on their contractual agreement. 
B)  Green National  Bank is a creditor and Ben is a debtor. 
C)  Ben is an agent of Green National  Bank. 
D)  Green National Bank is regulated only by the FDIC . 
A)  the relationship between Ben and his bank is based primarily on their contractual agreement. 
B)  Green National  Bank is a creditor and Ben is a debtor. 
C)  Ben is an agent of Green National  Bank. 
D)  Green National Bank is regulated only by the FDIC .

Question 12

For how long is a written stop payment order valid?

Accepted Answer

A)  One month. 
B)  Six months. 
C)  One year. 
D)  Indefinitely. 
A)  One month. 
B)  Six months. 
C)  One year. 
D)  Indefinitely.

Question 13

If you lose your wallet along with your 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 two days. 
C)  limited to $50 if you notify the bank within two days. 
D)  limited to $500 if you notify the bank within 60 days. 
A)  unlimited unless you notify the bank within 30 days. 
B)  limited to $200 if you notify the bank within two days. 
C)  limited to $50 if you notify the bank within two days. 
D)  limited to $500 if you notify the bank within 60 days.

Question 14

The relationship between the payor bank and its checking account customer is exclusively governed by statute and leaves no room for contractual modifications.

Accepted Answer

A) True 
 B)False

Question 15

The Electronic Funds Transfer Act governs electronic transfers between financial institutions, between financial institutions and businesses, and between businesses.

Accepted Answer

A) True 
 B)False

Question 16

A payor bank is under no obligation to its customer to pay an uncertified check that is more than six months old.

Accepted Answer

A) True 
 B)False

Question 17

A preauthorized electronic transfer from a consumer's account:

Accepted Answer

A)  may be orally authorized at the time the transfer is to be made. 
B)  must be authorized in writing in advance of the time the transfer is to be made. 
C)  may be stopped only by written notice to the financial institution at least five business days before the scheduled date of transfer. 
D)  is limited to an amount of $500 or less. 
A)  may be orally authorized at the time the transfer is to be made. 
B)  must be authorized in writing in advance of the time the transfer is to be made. 
C)  may be stopped only by written notice to the financial institution at least five business days before the scheduled date of transfer. 
D)  is limited to an amount of $500 or less.

Question 18

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 19

On April 6, Ellen sends a check out to a magazine publisher and then discovers she has already paid for the subscription. She calls her bank and orders that the bank not make payment. That order will be good until:

Accepted Answer

A)  April 13. 
B)  October 6. 
C)  April 13 if confirmed in writing. 
D)  October 6 if confirmed in writing. 
A)  April 13. 
B)  October 6. 
C)  April 13 if confirmed in writing. 
D)  October 6 if confirmed in writing.

Question 20

Any unauthorized indorsement must be asserted within one year under the UCC's statute of limitations provision.

Accepted Answer

A) True 
 B)False

Exam 27: Bank Deposits Collections and Funds Transfers

The Code imposes certain affirmative duties on bank customers and fixes time limits within which they must assert their rights.

A depositary bank is any bank handling an item for payment.

ABC Bank sent Joanne, a depositor, her January statement on January 31. Within what length of time after this date will Joanne have to notify ABC bank of any instruments containing alterations or unauthorized signatures included in her January statement?

A written stop payment order is effective indefinitely.

A provisional credit occurs at the time a depositary bank permits a customer to draw funds against the deposited check.

Which of the following is true of a collecting bank?

A check drawn on a bank is an order to pay a sum of money and an authorization to charge the amount to the drawer's account. The drawer may countermand this order by which of the following?

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

Congress enacted the Truth in Savings Act which requires all depositary banks to disclose in great detail to consumers the terms and conditions of their deposit accounts.

If Ben Stewart has a checking account at Green National Bank:

For how long is a written stop payment order valid?

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

The relationship between the payor bank and its checking account customer is exclusively governed by statute and leaves no room for contractual modifications.

The Electronic Funds Transfer Act governs electronic transfers between financial institutions, between financial institutions and businesses, and between businesses.

A payor bank is under no obligation to its customer to pay an uncertified check that is more than six months old.

A preauthorized electronic transfer from a consumer's account:

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:

On April 6, Ellen sends a check out to a magazine publisher and then discovers she has already paid for the subscription. She calls her bank and orders that the bank not make payment. That order will be good until:

Any unauthorized indorsement must be asserted within one year under the UCC's statute of limitations provision.

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