Question 1

The offering of a forged instrument to another person when the offeror knows it to be forged is known as uttering.

Accepted Answer

This statement is true. The act of offering or presenting a forged instrument (such as a check or a legal document) to another person knowing that it is forged is called uttering.

Question 2

Under the Check 21 Act,bank customers have an absolute right to see their original checks.

Accepted Answer

The Check 21 Act allows banks to create substitute checks, which are legal equivalents of original checks. Therefore, bank customers may not have access to their original checks but can request to see substitute checks.

Question 3

A business receiving money by electronic transfer is known as the beneficiary.

Accepted Answer

This statement is true. The beneficiary is the party that receives funds through electronic transfer, such as a wire transfer or automated clearing house (ACH) payment.

Question 4

Under the Check 21 Act,an image replacement document is also called a substitute check.

Accepted Answer

The Check 21 Act defines an image replacement document (IRD) as a paper reproduction of the original check created from a digital image, and it is also known as a substitute check. Therefore, the statement is true.

Question 5

Because she was traveling,Julie finally deposits her check dated May 1,2017 on the first business day of the new year,January 2,2018,into her account at Boise Bank.Boise Bank is obligated to pay the check.

Accepted Answer

Checks are typically considered stale after six months, meaning banks are not obligated to cash them after this period. Julie's check from May 1, 2017, would be considered stale by January 2, 2018.

Question 6

Under the Check 21 Act,checks may have a shorter float time and banks honor small overdrafts.

Accepted Answer

The Check 21 Act allows banks to create electronic images of checks, reducing processing time and potentially resulting in shorter float times. In addition, banks may choose to honor small overdrafts without charging fees or imposing other penalties.

Question 7

Ivan receives his June 2018 Friendly Bank statement and promptly calls the bank to report a series of forged checks shown on the statement dating back to March 2018.Friendly Bank must credit Ivan's account for the forged checks.

Accepted Answer

Friendly Bank is not obligated to credit Ivan's account for forged checks if they are reported more than 30 days after the statement is received, as per the Uniform Commercial Code (UCC) regulations.

Question 8

Janice and her daughter have a joint checking account.The basic insurance coverage by the FDIC can protect this account only up to $250,000.

Accepted Answer

The FDIC insures joint accounts up to $250,000 per co-owner, meaning Janice and her daughter would have a combined coverage of $500,000.

Question 9

The Electronic Fund Transfer Act applies to transactions only between banks and businesses.

Accepted Answer

The Electronic Fund Transfer Act applies to transactions between banks and consumers, not just businesses.

Question 10

A depositary bank is the first bank to which an item is transferred in the course of collection.

Accepted Answer

A depositary bank is indeed the first bank to which an item is transferred in the course of collection.

Question 11

A written stop payment order is effective for fourteen (14)calendar days.

Accepted Answer

A written stop payment order is typically effective for six months.

Question 12

On August 1st,Jim writes a check to Angela drawn on his account at Fidelity Bank.Angela deposits the check into her Boise Bank account on August 5th.In this case Jim's bank is the payor bank and must settle its accounts by midnight on August 5th.

Accepted Answer

According to the Uniform Commercial Code, a payor bank has until the end of the next banking day after receiving the item to either pay or return it. Therefore, Jim's bank has until midnight on August 6th to settle its accounts.

Question 13

If Nina deposits a check from Rico's bank into her bank that was made payable to her by Rico,any settlement given by Nina's bank is provisional.

Accepted Answer

When Nina deposits a check from Rico's bank into her bank, the settlement given by her bank is provisional until it is cleared by Rico's bank.

Question 14

Cindy's liability for the unauthorized use of her ATM card is limited to $500 if she notifies the bank after ninety (90)days of discovery.

Accepted Answer

According to the Electronic Fund Transfer Act, if Cindy notifies the bank within two (2) business days after discovering the loss or theft of her ATM card, her liability is limited to $50. If she notifies the bank after two (2) business days but before ninety (90) days, her liability is limited to $500. If she fails to notify the bank within ninety (90) days, she may be liable for the full amount of unauthorized transactions.

Question 15

On July 15th,the day he died,Sam wrote a check to Century Link to pay for his phone and Internet.On July 20th,an announcement of Sam's death was published in the local paper.But the check,along with others,sat on Sam's desk until August 15th,when the executor mailed them.Sam's bank must pay this check.

Accepted Answer

Under the Uniform Commercial Code (UCC), a bank has the right to refuse payment on a check if the account holder has died and the bank is aware of the account holder's death before the check is presented for payment.

Question 16

A stale check is a check that is presented for payment more than 60 days after its date.

Accepted Answer

A stale check is typically considered to be one that is presented for payment more than six months (180 days) after its date, not 60 days.

Question 17

Regulation CC requires banks to make all deposited funds available to depositors within twenty-four (24)hours,or the next business day.

Accepted Answer

While Regulation CC does require banks to make funds available to depositors in a timely manner, it sets specific time frames based on the type of deposit and other factors. For example, for a check deposit, the first $200 must be made available by the next business day, and the remainder within a maximum of two (2) additional business days. The full details of the availability requirements can be found in Regulation CC.

Question 18

Boise Bank becomes a debtor to Juanita when she deposits money into her account at Boise Bank.

Accepted Answer

When Juanita deposits money into her account, Boise Bank owes her the amount deposited, making the bank a debtor to Juanita.

Question 19

When an overdraft occurs,the bank becomes the customer's agent.

Accepted Answer

When an overdraft occurs, the bank covers the negative balance on behalf of the customer and becomes their agent to handle the transaction.

Question 20

When a check is deposited in the payee's own account in a depository bank,any settlement given by the depository bank is provisional until the next banking day at midnight.

Accepted Answer

Settlement given by the depository bank is provisional until the paying bank has paid the check or until the check has been otherwise finally settled. This does not necessarily align with the next banking day at midnight.

Quiz 18: Bank-Depositor Relationships and Cyber-Banking