Question 1

If First Bank receives a check for collection on Friday at 4:30 p.m., it does not have to present the check to the payor bank by midnight Saturday.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

What is the effect of a payor bank's dishonor of a check?

Accepted Answer

A)  It returns the check. 
B)  The provisional credits must be reversed. 
C)  The customer who deposited the item for collection must cover the item and seek recovery from the drawer or indorsers. 
D)  All of these will occur.

Question 4

An association of banks and other payors whose members settle accounts with each other on a daily basis is a:

Accepted Answer

A)  payor banking group. 
B)  clearinghouse. 
C)  provisional reserve. 
D)  None of these.

Question 5

Emma calls her bank to issue an oral stop payment order on a check on March 1st. She then leaves town for two weeks to visit her mother. When she returns, she goes to the bank to sign a written stop payment order, but finds the bank has already paid the check. What recourse does she have? Explain.

Accepted Answer

The answer of Emma calls her bank to issue an...

Question 6

Banks like electronic funds transfers because they eliminate the float time that a drawer enjoys on a checking account and the paperwork involved in processing checks.

Accepted Answer

A) True 
 B)False

Question 7

D drew a $100 check on ABC Bank payable "to the order of P ." P cashed the check at National Bank. National Bank is an agent of P until the drawee bank pays the check.

Accepted Answer

A) True 
 B)False

Question 8

Sue deposits in her account at First Bank a $50 check drawn on Valley Bank. First Bank transfers the check to Second Bank, which in turn forwards it to Valley Bank, which pays the item. Valley Bank is the:

Accepted Answer

A)  payor bank. 
B)  drawee bank. 
C)  collecting bank. 
D)  The payor bank and also the drawee bank.

Question 9

The Code imposes certain affirmative duties on bank customers and fixes time limits within which they must assert their rights.

Accepted Answer

A) True 
 B)False

Question 10

A bank is permitted by statute to remove an original paper check from the check collection process and send a substitute check instead.

Accepted Answer

A) True 
 B)False

Question 11

If a bank receives a check on Tuesday, it must take proper action, such as forwarding or presenting it, by midnight of Wednesday.

Accepted Answer

A) True 
 B)False

Question 12

The relationship between the payor bank and its checking account customer is exclusively governed by statute and leaves no room for contractual modifications.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)  It is primarily a regulatory 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 $50 if the consumer notifies the financial institution within two days after learning of the loss or theft. 
D)  All of these.

Question 14

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

Accepted Answer

A)  Duty of care. 
B)  Duty to act in a timely manner. 
C)  Duty to honor a valid stop payment order. 
D)  Duty to honor a restrictive endorsement.

Question 15

The duty of care exercised by a collecting bank in handling an item transferred to it for collection does not include:

Accepted Answer

A)  taking care in presenting the item. 
B)  that it must act within a reasonable time after receipt of the bank item. 
C)  taking care in routing. 
D)  taking care in selecting intermediary banks. 
E)  All of these are duties of care of collecting banks.

Question 16

Mary receives her monthly bank statement on December 30th. She looks at it quickly, then sets it aside. Three days later, she examines it again and discovers a forged check. What must she do to avoid responsibility for the check?

Accepted Answer

The answer of Mary receives her monthly bank statement on...

Question 17

Doug takes a $500 check drawn by Gail to Gail's drawee bank to cash it. Gail has over $10,000 on deposit in her account. If her bank refuses to pay Doug:

Accepted Answer

A)  Doug can sue the bank and demand payment. 
B)  if the check is over 30 days old, the bank has a right to refuse payment. 
C)  the bank has incurred a liability to Gail for its improper refusal to pay the check. 
D)  All of these.

Question 18

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 19

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 20

A preauthorized electronic transfer from a consumer's account:

Accepted Answer

A)  may be orally authorized at the time the transfer is to be made. 
B)  must be authorized in writing in advance of the time the transfer is to be made. 
C)  may be stopped only by written notice to the financial institution at least five business days before the scheduled date of transfer. 
D)  is limited to an amount of $500 or less.

Exam 27: Bank Deposits, Collections, and Funds Transfers

If First Bank receives a check for collection on Friday at 4:30 p.m., it does not have to present the check to the payor bank by midnight Saturday.

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

What is the effect of a payor bank's dishonor of a check?

An association of banks and other payors whose members settle accounts with each other on a daily basis is a:

Emma calls her bank to issue an oral stop payment order on a check on March 1st. She then leaves town for two weeks to visit her mother. When she returns, she goes to the bank to sign a written stop payment order, but finds the bank has already paid the check. What recourse does she have? Explain.

Banks like electronic funds transfers because they eliminate the float time that a drawer enjoys on a checking account and the paperwork involved in processing checks.

D drew a $100 check on ABC Bank payable "to the order of P ." P cashed the check at National Bank. National Bank is an agent of P until the drawee bank pays the check.

Sue deposits in her account at First Bank a $50 check drawn on Valley Bank. First Bank transfers the check to Second Bank, which in turn forwards it to Valley Bank, which pays the item. Valley Bank is the:

The Code imposes certain affirmative duties on bank customers and fixes time limits within which they must assert their rights.

A bank is permitted by statute to remove an original paper check from the check collection process and send a substitute check instead.

If a bank receives a check on Tuesday, it must take proper action, such as forwarding or presenting it, by midnight of Wednesday.

The relationship between the payor bank and its checking account customer is exclusively governed by statute and leaves no room for contractual modifications.

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

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

The duty of care exercised by a collecting bank in handling an item transferred to it for collection does not include:

Mary receives her monthly bank statement on December 30th. She looks at it quickly, then sets it aside. Three days later, she examines it again and discovers a forged check. What must she do to avoid responsibility for the check?

Doug takes a $500 check drawn by Gail to Gail's drawee bank to cash it. Gail has over $10,000 on deposit in her account. If her bank refuses to pay Doug:

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 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.

A preauthorized electronic transfer from a consumer's account: