Question 1

A forged signature is wholly inoperative as the signature of a drawer.

Accepted Answer

A) True 
 B)False  True

Question 2

A check is finally paid when ________.

Accepted Answer

A)  the depository bank credits the customer's account with an option to reverse the credit in case of dishonoring of the check 
B)  the payer bank fails to dishonor the check within certain statutory time periods 
C)  the drawer settles for the check while holding a right to revoke the settlement 
D)  the final bank in the collection process tentatively credits the account of the prior transferor 
A)  the depository bank credits the customer's account with an option to reverse the credit in case of dishonoring of the check 
B)  the payer bank fails to dishonor the check within certain statutory time periods 
C)  the drawer settles for the check while holding a right to revoke the settlement 
D)  the final bank in the collection process tentatively credits the account of the prior transferor B

Question 3

Article 4A of the Uniform Commercial Code establishes the ________.

Accepted Answer

A)  requirements for negotiable instruments, such as checks 
B)  rules and principles that regulate bank deposit and collection procedures for checking accounts offered by commercial banks 
C)  rules that regulate the creation and collection of and liability for wire transfers 
D)  guidelines for ownership of securities by investors 
A)  requirements for negotiable instruments, such as checks 
B)  rules and principles that regulate bank deposit and collection procedures for checking accounts offered by commercial banks 
C)  rules that regulate the creation and collection of and liability for wire transfers 
D)  guidelines for ownership of securities by investors C

Question 4

Which of the following is implied when a bank certifies a check?

Accepted Answer

A)  The bank agrees to accept the check when it is presented for payment. 
B)  The bank cashes the check only if the holder himself presents it for payment. 
C)  The bank withholds payment on the check until the drawer authorizes payment. 
D)  The bank holds the check as guarantee for repayment of a loan taken by a customer. 
A)  The bank agrees to accept the check when it is presented for payment. 
B)  The bank cashes the check only if the holder himself presents it for payment. 
C)  The bank withholds payment on the check until the drawer authorizes payment. 
D)  The bank holds the check as guarantee for repayment of a loan taken by a customer.

Question 5

What changes did the Dodd-Frank Wall Street Reform and Consumer Protection Act make to reform lending regulation?

Accepted Answer

After the country suffered a major finan

Question 6

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 7

If a drawer and a payee or holder have accounts at different banks, the check is called an "on them" item when it is presented for payment by the payee.

Accepted Answer

A) True 
 B)False

Question 8

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 9

The ________ is a federal statute, enacted by the Congress in 2010, that reorganizes federal government supervision of the banking system, regulates previous unregulated financial products and institutions, and adds a new consumer protection agency to protect consumers from abusive lending and banking practices.

Accepted Answer

A)  Dodd-Frank Wall Street Reform and Consumer Protection Act 
B)  Depository Institutions Deregulation and Monetary Control Act 
C)  Financial Institutions Reform, Recovery, and Enforcement Act 
D)  Riegle-Neal Interstate Banking and Branching Efficiency Act 
A)  Dodd-Frank Wall Street Reform and Consumer Protection Act 
B)  Depository Institutions Deregulation and Monetary Control Act 
C)  Financial Institutions Reform, Recovery, and Enforcement Act 
D)  Riegle-Neal Interstate Banking and Branching Efficiency Act

Question 10

Which of the following is an accurate description of wrongful dishonor of a check?

Accepted Answer

A)  A bank refusing to honor a properly payable check when there are sufficient funds in the drawer's account. 
B)  A bank refusing to honor a certified check when it is presented for payment more than a year from its date of issue. 
C)  A bank refusing to honor a check which has been outstanding for only a few days more than six months from the date of issue. 
D)  A bank refusing to honor an ordinary check when it believes that the payee has altered the amount on the check. 
A)  A bank refusing to honor a properly payable check when there are sufficient funds in the drawer's account. 
B)  A bank refusing to honor a certified check when it is presented for payment more than a year from its date of issue. 
C)  A bank refusing to honor a check which has been outstanding for only a few days more than six months from the date of issue. 
D)  A bank refusing to honor an ordinary check when it believes that the payee has altered the amount on the check.

Question 11

The Dodd-Frank Wall Street Reform and Consumer Protection Act reorganized and streamlined the federal government agencies that regulate the banking industry and strengthened bank regulatory oversight by federal agencies.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Instead of depositing an "on them" check for collection, a depositor can physically submit the check for payment at the payer bank. This is called ________.

Accepted Answer

A)  provisional credit 
B)  indorsement of the check 
C)  presentment across the counter 
D)  final settlement 
A)  provisional credit 
B)  indorsement of the check 
C)  presentment across the counter 
D)  final settlement

Question 14

If a payer bank pays the altered amount on an altered check, it can recover the altered amount minus the original tenor from the party who presented the altered check for payment.

Accepted Answer

A) True 
 B)False

Question 15

Greg owes Timothy $1,000 and gives him a check to repay the amount. When Timothy presents it at Greg's bank five months later, however, the bank refuses to pay the check. The bank was willing to act in good faith, but is not liable for the dishonor of the check. Which of the following, if true, would explain the dishonor of the check by Greg's bank?

Accepted Answer

A)  Timothy filled in his name as the payee on the check as Greg had forgotten to do so. 
B)  Greg had not filled in the amount, so Timothy duly wrote $1,000 on the check before he presented it to the bank. 
C)  Greg had issued a stop-payment order on the check immediately after giving it to Timothy. 
D)  Greg had postdated the check four months from the date of giving the check to Timothy. 
A)  Timothy filled in his name as the payee on the check as Greg had forgotten to do so. 
B)  Greg had not filled in the amount, so Timothy duly wrote $1,000 on the check before he presented it to the bank. 
C)  Greg had issued a stop-payment order on the check immediately after giving it to Timothy. 
D)  Greg had postdated the check four months from the date of giving the check to Timothy.

Question 16

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 17

Certified checks become stale after two years from the date of their issue.

Accepted Answer

A) True 
 B)False

Question 18

The Uniform Commercial Code places the risk of loss of an incomplete item on the drawee.

Accepted Answer

A) True 
 B)False

Question 19

Fabiola is an accountant with Rovers and Associates, a law firm in downtown Memphis. The firm maintains a checking account with Portris Bank for its operating expenses. On the 7th of every month, Fabiola gets an inventory report from the office manager listing the office supplies that are needed. Fabiola places the appropriate orders with Office Depot and writes them a check against the office's checking account. In the above banking transaction, Rovers and Associates is the ________.

Accepted Answer

A)  indorser 
B)  payee 
C)  drawer 
D)  drawee 
A)  indorser 
B)  payee 
C)  drawer 
D)  drawee

Question 20

Electronic Fund Transfer Act (EFTA) regulates consumer and commercial electronic funds transfers.

Accepted Answer

A) True 
 B)False

Exam 25: Banking System and Electronic Financial Transactions

A forged signature is wholly inoperative as the signature of a drawer.

A check is finally paid when ________.

Article 4A of the Uniform Commercial Code establishes the ________.

Which of the following is implied when a bank certifies a check?

What changes did the Dodd-Frank Wall Street Reform and Consumer Protection Act make to reform lending regulation?

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

If a drawer and a payee or holder have accounts at different banks, the check is called an "on them" item when it is presented for payment by the payee.

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 an accurate description of wrongful dishonor of a check?

The Dodd-Frank Wall Street Reform and Consumer Protection Act reorganized and streamlined the federal government agencies that regulate the banking industry and strengthened bank regulatory oversight by federal agencies.

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

Instead of depositing an "on them" check for collection, a depositor can physically submit the check for payment at the payer bank. This is called ________.

If a payer bank pays the altered amount on an altered check, it can recover the altered amount minus the original tenor from the party who presented the altered check for payment.

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

Certified checks become stale after two years from the date of their issue.

The Uniform Commercial Code places the risk of loss of an incomplete item on the drawee.

Electronic Fund Transfer Act (EFTA) regulates consumer and commercial electronic funds transfers.

Legal Heritage and the Digital Age

Courts and Jurisdiction

Judicial, Alternative, and E-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

Franchise and Special Forms of Business

Investor Protection and E-Securities Transactions

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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