Question 1

If a depositor in First Bank takes a check written on Valley Bank to First Bank to deposit, it will not normally be credited to his account until collected from the payor bank.

Accepted Answer

A) True 
 B)False

Question 2

Article 4 of the UCC, entitled "Bank Deposits and Collections" provides the principal rules governing bank collection practices.

Accepted Answer

A) True 
 B)False

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

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Alvero tries to make a $75 withdrawal from an ATM, but the terminal has run out of cash.The bank is liable to Alvero for damages proximately caused by its failure to make the EFT.

Accepted Answer

A) True 
 B)False

Question 6

Goble, the seller, obtains authority from Meigs, the buyer, to debit Meigs's account after Goble ships the goods.Article 4A covers this transaction.

Accepted Answer

A) True 
 B)False

Question 7

A bank may pay a check after the death of its customer for ten days following the date of his death unless a person claiming an interest in the account orders the bank to stop making such payments.

Accepted Answer

A) True 
 B)False

Question 8

Under the Competitive Equality Banking Act, a nonlocal check must clear in no more than four intervening business days.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

If Ben Stewart has a checking account at First Bank:

Accepted Answer

A)  Ben is an agent of First Bank. 
B)  First Bank is a creditor and Ben is a debtor. 
C)  the relationship between Ben and his bank is based primarily on their contractual agreement. 
D)  All of these.

Question 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is true of a collecting bank?

Accepted Answer

A)  The relationship between a collecting bank and the owner of an item, once settled, becomes a debtor-creditor relationship. 
B)  A collecting bank is an agent of the owner of an item until settlement becomes final. 
C)  A collecting bank may be a sub-agent of the owner until settlement becomes final. 
D)  All of these are true. 
E)  None of these are true.

Question 14

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 15

Under Revised Article 4, if a bank pays a postdated instrument prior to its date, it will be a proper debit to the drawer's account, unless the drawer had timely informed the drawee that the check was postdated.

Accepted Answer

A) True 
 B)False

Question 16

The Check Clearing for the 21st Century Act requires banks to accept checks in electronic form.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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

Question 18

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 19

For how long is a written stop payment order valid?

Accepted Answer

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

Question 20

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

Exam 27: Bank Deposits, Collections, and Funds Transferspart Vi: Agency

If a depositor in First Bank takes a check written on Valley Bank to First Bank to deposit, it will not normally be credited to his account until collected from the payor bank.

Article 4 of the UCC, entitled "Bank Deposits and Collections" provides the principal rules governing bank collection practices.

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

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

Alvero tries to make a $75 withdrawal from an ATM, but the terminal has run out of cash.The bank is liable to Alvero for damages proximately caused by its failure to make the EFT.

Goble, the seller, obtains authority from Meigs, the buyer, to debit Meigs's account after Goble ships the goods.Article 4A covers this transaction.

A bank may pay a check after the death of its customer for ten days following the date of his death unless a person claiming an interest in the account orders the bank to stop making such payments.

Under the Competitive Equality Banking Act, a nonlocal check must clear in no more than four intervening business days.

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?

If Ben Stewart has a checking account at First Bank:

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

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

Which of the following is true of a collecting bank?

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?

Under Revised Article 4, if a bank pays a postdated instrument prior to its date, it will be a proper debit to the drawer's account, unless the drawer had timely informed the drawee that the check was postdated.

The Check Clearing for the 21st Century Act requires banks to accept checks in electronic form.

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

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

For how long is a written stop payment order valid?

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