Question 1

An agency relationship arises between the customer and the bank when the customer writes a check on his or her account.

Accepted Answer

A) True 
 B)False  True

Question 2

Dick signs a check "pay to the order of Sally" drawn on Dick's account in Suburban Bank. Dick has $400 in his account but the amount of the check is $500, which the bank pays. This is​

Accepted Answer

A)   ​a dishonored check.
B)   ​an overdraft.
C)   ​a stale check.
D)   ​an oversight. B

Question 3

Finance Bank receives a check drawn on the account of Enterprise Industries, Inc., one of the bank's customers, at 3 p.m. Friday. Dora, the presenter of the check, is not one of the bank's customers. The bank uses deferred posting with a 2 p.m. cutoff hour. If it decides to dishonor the check, it must do so by midnight​

Accepted Answer

A)   ​Saturday.
B)   ​Sunday.
C)   ​Monday.
D)   ​Tuesday. D

Question 4

Tomas writes a check for $1,000 drawn on Unified Bank and presents it to Viola. Viola presents the check for payment to Unified Bank, which dishonors it. The party most likely liable to Viola is​

Accepted Answer

A)   ​Unity Bank in a civil suit.
B)   ​Tomas in a civil suit.
C)   ​Tomas in a criminal prosecution.
D)   ​none of the choices.

Question 5

A drawer is liable to the holder of a check in a civil suit if the check is dishonored for insufficient funds.

Accepted Answer

A) True 
 B)False

Question 6

Faye forges Greta's signature on a check "payable to the order of Faye" drawn on Greta's account in Hearthside Bank. Most likely, if the bank pays the check​

Accepted Answer

A)   ​the bank will have to recredit Greta's account.
B)   ​the loss will be apportioned among all of the bank's customers.
C)   ​Greta will be liable for the amount.
D)   ​the Federal Reserve will reimburse all parties for their costs.

Question 7

Ian buys a phone in Jiffy Mart, using the means that accounts for more retail payments than any other. This means of payment is​

Accepted Answer

A)   ​a debit card.
B)   ​a personal check.
C)   ​a commercial check.
D)   ​cash.

Question 8

Maya uses e-money consisting of funds stored on microchips in her laptop, phone, and tablet to pay bills. E-money is replacing physical cash with virtual cash in the form of​

Accepted Answer

A)   ​coins and paper currency.
B)   ​electronic impulses.
C)   ​checks.
D)   ​none of the choices.

Question 9

Gary writes a check drawn on Hilltop Bank for $400 "payable to Ivan" on May 1. Gary dies on May 3. Ivan presents the check to the bank on May 5. Unaware of Gary's death, the bank​

Accepted Answer

A)   ​may pay the check.
B)   ​must consult with Gary's heirs before paying the check.
C)   ​must certify the check.
D)   ​can do nothing until Ivan claims an interest in the account.

Question 10

Smith & Jones P.A. is a business customer of Platinum Bank. Under federal law, Smith & Jones cannot demand​

Accepted Answer

A)   ​any proof of payment except the bank's good faith.
B)   ​monthly statements.
C)   ​recrediting of its account on payment of a forged item.
D)   ​the return of its original checks with its monthly statements.

Question 11

Ervin signs a check "pay to the order of Felicia" drawn on Ervin's account in Garden Fields Bank. Ervin later orders the bank not to pay the check, but the bank pays it over Ervin's order. Subsequent checks written on Ervin's account "bounce." Most likely liable for the costs to Ervin is​

Accepted Answer

A)   ​Garden Fields Bank.
B)   ​any party to whom a subsequent check was written.
C)   ​Felicia.
D)   ​Ervin.

Question 12

Ridgeline Bank creates a paper reproduction of customer Sophie's check with the statement "This is a legal copy of your check. You can use it in the same way you would use the original check." This is​

Accepted Answer

A)   ​a certified check.
B)   ​a cashier's check.
C)   ​a substitute check.
D)   ​a void check.

Question 13

Clyde issues a check payable to Discount Mart. Ethel, Discount's cashier, forges the store's indorsement and deposits the check in her bank account. Clyde's bank, Farmers State Bank, pays the check. Clyde can recover from​

Accepted Answer

A)   ​Ethel, but not the bank.
B)   ​the bank, which can recover from Ethel.
C)   ​the bank, which cannot recover from Ethel.
D)   ​neither Ethel nor the bank.

Question 14

A customer can stop payment on a check that has been certified or accepted by a bank.

Accepted Answer

A) True 
 B)False

Question 15

Brandy forges Caleb's signature on a check "payable to the order of Brandy" drawn on Caleb's account in Downtown Bank. Caleb's forged signature is​

Accepted Answer

A)   ​effective if an innocent third party accepts the check.
B)   ​effective to the degree that it matches Caleb's genuine signature.
C)   ​effective to the extent that Downtown Bank debits Caleb's account.
D)   ​not effective.

Question 16

State Bank agrees to accept a check by setting aside sufficient funds to cover the amount. This check is considered​

Accepted Answer

A)   ​deposited.
B)   ​cashed.
C)   ​certified.
D)   ​a provisional credit.

Question 17

A certified check is a check that has been accepted by the bank on which it is drawn.

Accepted Answer

A) True 
 B)False

Question 18

Elmore pays First National Bank $1,000 plus a service fee to draw a check on itself made payable to Go Delivery Service. This is​

Accepted Answer

A)   ​a stop-payment order.
B)   ​a cashier's check.
C)   ​a stale check.
D)   ​an overdraft.

Question 19

The Uniform Commercial Code regulates checks.

Accepted Answer

A) True 
 B)False

Question 20

The rights and duties of a bank and its customer are contractual.

Accepted Answer

A) True 
 B)False

Exam 28: Banking in the Digital Age

An agency relationship arises between the customer and the bank when the customer writes a check on his or her account.

Dick signs a check "pay to the order of Sally" drawn on Dick's account in Suburban Bank. Dick has $400 in his account but the amount of the check is $500, which the bank pays. This is​

Tomas writes a check for $1,000 drawn on Unified Bank and presents it to Viola. Viola presents the check for payment to Unified Bank, which dishonors it. The party most likely liable to Viola is​

A drawer is liable to the holder of a check in a civil suit if the check is dishonored for insufficient funds.

Faye forges Greta's signature on a check "payable to the order of Faye" drawn on Greta's account in Hearthside Bank. Most likely, if the bank pays the check​

Ian buys a phone in Jiffy Mart, using the means that accounts for more retail payments than any other. This means of payment is​

Maya uses e-money consisting of funds stored on microchips in her laptop, phone, and tablet to pay bills. E-money is replacing physical cash with virtual cash in the form of​

Gary writes a check drawn on Hilltop Bank for $400 "payable to Ivan" on May 1. Gary dies on May 3. Ivan presents the check to the bank on May 5. Unaware of Gary's death, the bank​

Smith & Jones P.A. is a business customer of Platinum Bank. Under federal law, Smith & Jones cannot demand​

Ervin signs a check "pay to the order of Felicia" drawn on Ervin's account in Garden Fields Bank. Ervin later orders the bank not to pay the check, but the bank pays it over Ervin's order. Subsequent checks written on Ervin's account "bounce." Most likely liable for the costs to Ervin is​

Ridgeline Bank creates a paper reproduction of customer Sophie's check with the statement "This is a legal copy of your check. You can use it in the same way you would use the original check." This is​

Clyde issues a check payable to Discount Mart. Ethel, Discount's cashier, forges the store's indorsement and deposits the check in her bank account. Clyde's bank, Farmers State Bank, pays the check. Clyde can recover from​

A customer can stop payment on a check that has been certified or accepted by a bank.

Brandy forges Caleb's signature on a check "payable to the order of Brandy" drawn on Caleb's account in Downtown Bank. Caleb's forged signature is​

State Bank agrees to accept a check by setting aside sufficient funds to cover the amount. This check is considered​

A certified check is a check that has been accepted by the bank on which it is drawn.

Elmore pays First National Bank $1,000 plus a service fee to draw a check on itself made payable to Go Delivery Service. This is​

The Uniform Commercial Code regulates checks.

The rights and duties of a bank and its customer are contractual.

Dick signs a check "pay to the order of Sally" drawn on Dick's account in Suburban Bank. Dick has $400 in his account but the amount of the check is $500, which the bank pays. This is

Tomas writes a check for $1,000 drawn on Unified Bank and presents it to Viola. Viola presents the check for payment to Unified Bank, which dishonors it. The party most likely liable to Viola is

Faye forges Greta's signature on a check "payable to the order of Faye" drawn on Greta's account in Hearthside Bank. Most likely, if the bank pays the check

Ian buys a phone in Jiffy Mart, using the means that accounts for more retail payments than any other. This means of payment is

Maya uses e-money consisting of funds stored on microchips in her laptop, phone, and tablet to pay bills. E-money is replacing physical cash with virtual cash in the form of

Gary writes a check drawn on Hilltop Bank for $400 "payable to Ivan" on May 1. Gary dies on May 3. Ivan presents the check to the bank on May 5. Unaware of Gary's death, the bank

Smith & Jones P.A. is a business customer of Platinum Bank. Under federal law, Smith & Jones cannot demand

Ervin signs a check "pay to the order of Felicia" drawn on Ervin's account in Garden Fields Bank. Ervin later orders the bank not to pay the check, but the bank pays it over Ervin's order. Subsequent checks written on Ervin's account "bounce." Most likely liable for the costs to Ervin is

Ridgeline Bank creates a paper reproduction of customer Sophie's check with the statement "This is a legal copy of your check. You can use it in the same way you would use the original check." This is

Clyde issues a check payable to Discount Mart. Ethel, Discount's cashier, forges the store's indorsement and deposits the check in her bank account. Clyde's bank, Farmers State Bank, pays the check. Clyde can recover from

Brandy forges Caleb's signature on a check "payable to the order of Brandy" drawn on Caleb's account in Downtown Bank. Caleb's forged signature is

State Bank agrees to accept a check by setting aside sufficient funds to cover the amount. This check is considered

Elmore pays First National Bank $1,000 plus a service fee to draw a check on itself made payable to Go Delivery Service. This is