Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is true of the "deferred posting rule"?

Accepted Answer

A) It allows banks to fix an afternoon hour of 2:00 or later as a cutoff hour for the purpose of processing checks and deposits. 
B) According to this rule, when a customer deposits a check for collection, the depository bank does not have to pay the customer until the check clears. 
C) It mandates banks to mail their checking account customers monthly statements of their accounts and any canceled checks should accompany this statement. 
D) According to this rule, a customer is liable for payment to his bank if he fails to report any unauthorized transactions within 30 days from the receipt of the account statement. 
A) It allows banks to fix an afternoon hour of 2:00 or later as a cutoff hour for the purpose of processing checks and deposits. 
B) According to this rule, when a customer deposits a check for collection, the depository bank does not have to pay the customer until the check clears. 
C) It mandates banks to mail their checking account customers monthly statements of their accounts and any canceled checks should accompany this statement. 
D) According to this rule, a customer is liable for payment to his bank if he fails to report any unauthorized transactions within 30 days from the receipt of the account statement.

Question 3

The bank where the payee or holder of a check has an account is known as the ________.

Accepted Answer

A) payer bank 
B) depository bank 
C) intermediary bank 
D) private bank 
A) payer bank 
B) depository bank 
C) intermediary bank 
D) private bank

Question 4

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

Accepted Answer

A) A bank can send unsolicited EFTS debit cards to a consumer only if the cards are valid for use. 
B) If a customer notifies the issuing bank of a stolen or lost debit card within two days of the loss, the customer's liability is limited to a maximum of $500. 
C) A bank must provide annual statements of electronic funds transfers to customers who conduct such transactions in a given financial year. 
D) Other than for a telephone transaction, a bank must provide a customer with a written receipt of a transaction made through a computer terminal. 
A) A bank can send unsolicited EFTS debit cards to a consumer only if the cards are valid for use. 
B) If a customer notifies the issuing bank of a stolen or lost debit card within two days of the loss, the customer's liability is limited to a maximum of $500. 
C) A bank must provide annual statements of electronic funds transfers to customers who conduct such transactions in a given financial year. 
D) Other than for a telephone transaction, a bank must provide a customer with a written receipt of a transaction made through a computer terminal.

Question 5

Mrs.Dawson wrote a check to Kevin for $50 on New Year's Day for clearing the snow from her driveway on Christmas Eve.However,when Kevin tries to cash the check at Mrs.Dawson's bank,he is told that the check is stale.Which of the following is the most likely reason for Mrs.Dawson's check being dishonored by the bank?

Accepted Answer

A) Mrs. Dawson did not have enough funds in her checking account. 
B) Mrs. Dawson had dated the check for the previous year instead of the current year. 
C) Mrs. Dawson had not identified Kevin as the payee while writing out the check. 
D) Mrs. Dawson had given Kevin a check which was dated over six months ahead of the date of issue. 
A) Mrs. Dawson did not have enough funds in her checking account. 
B) Mrs. Dawson had dated the check for the previous year instead of the current year. 
C) Mrs. Dawson had not identified Kevin as the payee while writing out the check. 
D) Mrs. Dawson had given Kevin a check which was dated over six months ahead of the date of issue.

Question 6

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.

Accepted Answer

A) True 
 B)False

Question 7

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).

Accepted Answer

A) ordinary check 
B) promissory note 
C) bill of exchange 
D) credit memo 
A) ordinary check 
B) promissory note 
C) bill of exchange 
D) credit memo

Question 8

Which of the following is one of the purposes of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010?

Accepted Answer

A) monitoring the legitimacy of consumer and commercial wire transfers 
B) establishing the reporting requirements for financial transactions, including off-balance-sheet transactions 
C) regulating previously unregulated financial products and institutions 
D) overseeing, inspecting, and disciplining accounting firms in their roles as auditors of public companies 
A) monitoring the legitimacy of consumer and commercial wire transfers 
B) establishing the reporting requirements for financial transactions, including off-balance-sheet transactions 
C) regulating previously unregulated financial products and institutions 
D) overseeing, inspecting, and disciplining accounting firms in their roles as auditors of public companies

Question 9

George,John,Paul,Ringo,and Brian are five friends from Iowa.George owes John $100,John owes Paul $200,Paul owes Ringo $300,and Ringo owes Brian $400.John and Paul find a check belonging to George.John names himself as the payee on the check,fills in $200 as the amount,and forges George's signature on it.He indorses the check to Paul and asks him to consider his debt repaid,while keeping the knowledge of the forgery to himself.Paul,in turn,indorses the check to Ringo and pays Ringo the remaining $100 in cash.Predictably,Ringo indorses the check to Brian,who presents the check to George's bank and receives payment.Who among the following can the bank recover the money from,once the forgery is detected?

Accepted Answer

A) George 
B) Paul 
C) Brian 
D) Ringo 
A) George 
B) Paul 
C) Brian 
D) Ringo

Question 10

If a drawer and a payee or holder have accounts at different banks,the payer bank and depository bank are not the same bank.In this case,the check is called a(n)________.

Accepted Answer

A) non-negotiable instrument 
B) presentment warranty 
C) stale check 
D) "on them" item 
A) non-negotiable instrument 
B) presentment warranty 
C) stale check 
D) "on them" item

Question 11

In which of the following cases is an overdraft created in a drawer's account?

Accepted Answer

A) a properly payable check issued by the drawer is presented for payment, but the drawer's account does not have sufficient funds in it 
B) the drawer issues a stop-payment order for a check, but the bank still goes ahead and pays the holder of the check 
C) the bank pays the holder of a check in which the amount payable is altered to indicate a higher amount than was originally intended 
D) the payee presents the check after six months from the date of the check and the bank still pays the holder 
A) a properly payable check issued by the drawer is presented for payment, but the drawer's account does not have sufficient funds in it 
B) the drawer issues a stop-payment order for a check, but the bank still goes ahead and pays the holder of the check 
C) the bank pays the holder of a check in which the amount payable is altered to indicate a higher amount than was originally intended 
D) the payee presents the check after six months from the date of the check and the bank still pays the holder

Question 12

How is a cashier's check different from an ordinary check?

Accepted Answer

A) Cashier's checks can be postdated, but ordinary checks cannot be postdated. 
B) Unlike ordinary checks, cashier's checks do not require the purchaser to hold a checking account at that bank. 
C) Unlike ordinary checks, cashier's checks are cancellable negotiable instruments upon issue. 
D) Cashier's checks are three-party checks, while ordinary checks involve only two parties. 
A) Cashier's checks can be postdated, but ordinary checks cannot be postdated. 
B) Unlike ordinary checks, cashier's checks do not require the purchaser to hold a checking account at that bank. 
C) Unlike ordinary checks, cashier's checks are cancellable negotiable instruments upon issue. 
D) Cashier's checks are three-party checks, while ordinary checks involve only two parties.

Question 13

When a customer deposits a check into a checking account for collection,the depository bank does not have to pay the customer the amount of the check until the check "clears."

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) certified 
B) indorsed 
C) honored 
D) collected 
A) certified 
B) indorsed 
C) honored 
D) collected

Question 15

When the drawee bank receives a properly drawn and payable check,the bank is under a duty to honor the check and charge (debit)the drawer's account the amount of the check if there are sufficient funds in the customer's checking account at the bank.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following regulatory agencies was set up under the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act?

Accepted Answer

A) Federal Deposit Insurance Corporation 
B) Bureau of Consumer Financial Protection 
C) National Credit Union Administration 
D) U.S. Securities and Exchange Commission 
A) Federal Deposit Insurance Corporation 
B) Bureau of Consumer Financial Protection 
C) National Credit Union Administration 
D) U.S. Securities and Exchange Commission

Question 17

A creditor-debtor relationship between a customer and a bank is created if the customer writes a check against his or her checking account.

Accepted Answer

A) True 
 B)False

Question 18

The drawer of a check is the customer who maintains the checking account and writes (draws)checks against the account.

Accepted Answer

A) True 
 B)False

Question 19

A check that has been outstanding for more than ________ is considered stale.

Accepted Answer

A) six months 
B) one year 
C) three months 
D) nine months 
A) six months 
B) one year 
C) three months 
D) nine months

Question 20

In which of the following cases is a bank considered liable for unauthorized payments?

Accepted Answer

A) The bank does not attach canceled checks to the monthly statements of account. 
B) The bank does not provide images of paid checks online. 
C) The bank destroys original copies of canceled checks not sent to customers after seven years from the date of the check. 
D) The bank does not provide sufficient information on checks paid to customers in their monthly account statements. 
A) The bank does not attach canceled checks to the monthly statements of account. 
B) The bank does not provide images of paid checks online. 
C) The bank destroys original copies of canceled checks not sent to customers after seven years from the date of the check. 
D) The bank does not provide sufficient information on checks paid to customers in their monthly account statements.

Exam 25: Banking System and Electronic Financial Transactions

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

Which of the following is true of the "deferred posting rule"?

The bank where the payee or holder of a check has an account is known as the ________.

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

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.

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).

Which of the following is one of the purposes of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010?

If a drawer and a payee or holder have accounts at different banks,the payer bank and depository bank are not the same bank.In this case,the check is called a(n)________.

In which of the following cases is an overdraft created in a drawer's account?

How is a cashier's check different from an ordinary check?

When a customer deposits a check into a checking account for collection,the depository bank does not have to pay the customer the amount of the check until the check "clears."

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

When the drawee bank receives a properly drawn and payable check,the bank is under a duty to honor the check and charge (debit)the drawer's account the amount of the check if there are sufficient funds in the customer's checking account at the bank.

Which of the following regulatory agencies was set up under the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act?

A creditor-debtor relationship between a customer and a bank is created if the customer writes a check against his or her checking account.

The drawer of a check is the customer who maintains the checking account and writes (draws)checks against the account.

A check that has been outstanding for more than ________ is considered stale.

In which of the following cases is a bank considered liable for unauthorized payments?

Legal Environment of Business and Online Commerce

Courts and Jurisdiction

Judicial, alternative, and Online Dispute Resolution

Constitutional Law for Business and E-Commerce

Intentional Torts and Negligence

Product and Strict Liability

Intellectual Property and Cyber Piracy

Criminal Law and Cyber Crime

Nature of Traditional and E-Contracts

Agreement

Consideration and Promissory Estoppel

Capacity and Legality

Genuineness of Assent and Undue Influence

Statute of Frauds and Equitable Exceptions

Third-Party Rights and Discharge

Remedies for Breach of Traditional and E-Contracts

Digital Law and E-Commerce

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Warranties

Creation of Negotiable Instruments

Holder in Due Course and Transferability

Liability, defenses, and Discharge

Credit, mortgages, and Debtors Rights

Secured Transactions

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, agents, and Independent Contractors

Employment, worker Protection, and Immigration Law

Labor Law

Equal Opportunity in Employment

Small Business, entrepreneurship, and General Partnerships

Limited Partnerships and Special Partnerships

Corporate Formation and Financing

Corporate Governance and the Sarbanes-Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Companies and Limited Liability Partnerships

Franchises and Special Forms of Businesses

Investor Protection, e-Securities, and Wall Street Reform

Ethics and Social Responsibility of Business

Administrative Law and Regulatory Agencies

Consumer Protection and Product Safety

Environmental Protection

Antitrust Law and Unfair Trade Practices

Personal Property, real Property, and Insurance

Real Property

Landlord-Tenant Law and Land Use Regulation

Insurance

Accountants Duties and Liability

Wills, trusts, and Estates

Family Law

International and World Trade Law

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