Question 1

First Bank pays a forged check on Donald's account.Donald finds it when,the day he receives it,he is examining his bank statement.He brings it to the bank the next day,but they refuse to credit his account.The bank has an obligation to recredit Donald's account.

Accepted Answer

A) True 
 B)False

Question 2

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)  cooperative.

Question 3

If a bank pays on a check even though it has a "stop payment order," it is liable to the customer only if the customer can prove a loss because of the payment.

Accepted Answer

A) True 
 B)False

Question 4

A payment order:

Accepted Answer

A)  is a sender's instruction to a receiving bank to pay,or to cause another bank to pay,a fixed or determinable amount of money to a beneficiary. 
B)  is issued when sent and,if more than one payment is to be made,the payments are condensed into one payment order. 
C)  must be communicated in writing or electronically. 
D)  must be expressed in both words and numbers in order to be valid.

Question 5

The fact that a drawer has filed a stop payment order automatically relieves the drawer of liability on the underlying obligation.

Accepted Answer

A) True 
 B)False

Question 6

Each provisional settlement made in the collection chain is made final when the next bank takes the check.

Accepted Answer

A) True 
 B)False

Question 7

If a checking account customer's funds are insufficient to pay all of the items that the bank receives on that account on a given day,the bank may charge the items against the account in any order the bank deems convenient without incurring liability to the customer/drawer for choosing one item over another.

Accepted Answer

A) True 
 B)False

Question 8

Lois takes her paycheck to Third National Bank for deposit at 6 p.m.on Wednesday.Third National Bank has until when to forward the check?

Accepted Answer

A)  Midnight Thursday 
B)  Midnight Friday 
C)  Close of business Friday 
D)  Close of business Thursday

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 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

The answer of What is electronic funds transfer? Why do...

Question 11

Banks may not pay checks issued by a customer who has died.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is true with regard to the federal Electronic Fund Transfer Act?

Accepted Answer

A)  It is primarily a disclosure statute. 
B)  It gives the same protections to customers that are found in Article 4. 
C)  It limits a customer's liability for unauthorized transfers to $500 if notification requirements are met. 
D)  It requires banks to pay a higher interest on deposit accounts.

Question 13

For how long is an oral stop payment order valid?

Accepted Answer

A)  14 calendar days 
B)  14 business days 
C)  One month 
D)  Six months

Question 14

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

Accepted Answer

A)  Duty of care 
B)  Duty to act timely 
C)  Duty to honor a valid stop payment order 
D)  Duty to honor a restrictive indorsement

Question 15

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.

Question 16

A payor bank is is required to pay an uncertified check even if it is nine months old.

Accepted Answer

A) True 
 B)False

Question 17

Caryn deposits a check in her bank at 2:30 on Monday.The bank may,under the Code,treat the check as having been deposited on Tuesday for purposes of meeting the midnight deadline rule.

Accepted Answer

A) True 
 B)False

Question 18

ABC Bank sent Joanne,a depositor,her January statement on January 31.Within what length of time after this date will Joanne have to examine the statement and enclosed items and notify ABC bank of any errors?

Accepted Answer

A)  10 days 
B)  30 days 
C)  60 days 
D)  1 year

Question 19

Banking and the collection process of checks is governed solely by state law.

Accepted Answer

A) True 
 B)False

Question 20

If Valley Bank pays a check over a stop payment order of one of its customers,Valley Bank is subrogated to the rights of:

Accepted Answer

A)  the drawer against the payee or any other holder. 
B)  any holder in due course on the item against the drawer. 
C)  the payee or any other holder against the drawer. 
D)  All of these are correct.

Exam 29: Bank Deposits,collections,and Funds Transfers

First Bank pays a forged check on Donald's account.Donald finds it when,the day he receives it,he is examining his bank statement.He brings it to the bank the next day,but they refuse to credit his account.The bank has an obligation to recredit Donald's account.

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

If a bank pays on a check even though it has a "stop payment order," it is liable to the customer only if the customer can prove a loss because of the payment.

A payment order:

The fact that a drawer has filed a stop payment order automatically relieves the drawer of liability on the underlying obligation.

Each provisional settlement made in the collection chain is made final when the next bank takes the check.

Lois takes her paycheck to Third National Bank for deposit at 6 p.m.on Wednesday.Third National Bank has until when to forward the check?

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

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?

Banks may not pay checks issued by a customer who has died.

Which of the following is true with regard to the federal Electronic Fund Transfer Act?

For how long is an oral stop payment order valid?

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

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

A payor bank is is required to pay an uncertified check even if it is nine months old.

Caryn deposits a check in her bank at 2:30 on Monday.The bank may,under the Code,treat the check as having been deposited on Tuesday for purposes of meeting the midnight deadline rule.

ABC Bank sent Joanne,a depositor,her January statement on January 31.Within what length of time after this date will Joanne have to examine the statement and enclosed items and notify ABC bank of any errors?

Banking and the collection process of checks is governed solely by state law.

If Valley Bank pays a check over a stop payment order of one of its customers,Valley Bank is subrogated to the rights of: