Question 1

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 2

Which of the following is true about UCC Article 4A?

Accepted Answer

A)  It is designed to overlap coverage of the Electronic Funds Transfer Act. 
B)  It covers both credit and debit transactions. 
C)  It covers wholesale funds transfers. 
D)  It does not allow parties to vary their rights and obligations by agreement. 
A)  It is designed to overlap coverage of the Electronic Funds Transfer Act. 
B)  It covers both credit and debit transactions. 
C)  It covers wholesale funds transfers. 
D)  It does not allow parties to vary their rights and obligations by agreement.

Question 3

If Margie makes out a check for $27.50 when she has only $10 in her account, her bank may:

Accepted Answer

A)  refuse to pay the check. 
B)  pay the check. 
C)  bill Margie for $17.50 and a service charge. 
D)  Any of these are options. 
A)  refuse to pay the check. 
B)  pay the check. 
C)  bill Margie for $17.50 and a service charge. 
D)  Any of these are options.

Question 4

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 5

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 care and promptness to examine the bank statement. 
B)  A customer's duty of examination includes checking 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 is not required to exercise ordinary care in paying the items. 
A)  The customer is required to exercise reasonable care and promptness to examine the bank statement. 
B)  A customer's duty of examination includes checking 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 is not required to exercise ordinary care in paying the items.

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.

Exam 27: Bank Deposits, Collections, and Funds Transfers

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

Which of the following is true about UCC Article 4A?

If Margie makes out a check for $27.50 when she has only $10 in her account, her bank may:

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

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

Introduction to Law

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