Question 1

Ridgetop 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
A)acertified check.
B)acashier's check.
C)asubstitute check.
D)avoid check.

Accepted Answer

A substitute check is a paper reproduction of a customer's original check that contains an image of the front and back of the original check, along with certain additional information. These substitute checks are legally acceptable as a replacement of the original check and can be used in the same way as the original check. Therefore, the given scenario is an example of a substitute check. The other options, such as certified and cashier's checks, involve different processes and are not relevant to the given scenario. A void check is simply a check with the word "VOID" written across it to indicate that it cannot be used for payment.

Question 2

Jackie inserts a debit card issued by her bank into a machine and keys in her personal identification number. She is then able to withdraw $500 in cash. Jackie is using
A)an automated teller machine.
B)apoint-of-sale system.
C)adirect deposit system.
D)an Internet payment system.

Accepted Answer

Jackie is using an Automated Teller Machine (ATM), which allows her to withdraw cash from her account by using a debit card and personal identification number. A point-of-sale system is used in retail stores to process a transaction when a customer makes a purchase. A direct deposit system is used to electronically transfer funds from one bank account to another, typically used for receiving wages or government benefit payments. An Internet payment system allows for online payments or transfers, such as through PayPal or Apple Pay.

Question 3

Britney loses her Campus Bank access card. She realizes her loss the next day but waits a week to call the bank. Meanwhile,Drake finds and uses Britney's card to withdraw $3,000 from Britney'saccount.
-Refer to Fact Pattern 24-1.Britney is responsible for
A)$0.
B)$50.
C)$500.
D)$3,000.

Accepted Answer

Although Britney is not responsible for Drake's fraudulent withdrawal, she is responsible for up to $500 if she did not notify the bank of her lost card within two business days. By waiting a week to report the loss, Britney failed to meet this requirement and is therefore responsible for the first $500 of fraudulent charges made on her account.

Question 4

Falls River Bank receives a check drawn on the account of Get-Rich Industries,Inc.,one of the bank's customers,at 3 p.m. Friday. Hildy,the pre-senter 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 dis-honor the check,it must do so by midnight
A)Saturday.
B)Sunday.
C)Monday.
D)Tuesday.

Accepted Answer

The answer of Falls River Bank receives a check drawn...

Question 5

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

Accepted Answer

Clyde can recover from both Ethel and the bank since Ethel committed forgery and the bank paid a check with a forged indorsement. The bank can also recover from Ethel for her fraudulent endorsement.

Question 6

Nick steals two checks from Pauline-a blank check and a check payable to the order of Retail Outlets Company,drawn on Pauline's account with State Bank. Nick forges Pauline's sig-na-ture on the blank check and makes it payable to himself. Nick forges Retail Outlets's indorsement on the back of the check payable to Retail Outlets,and adds "Pay to the order of Nick." At United Credit Union,Nick indorses the back of both checks with his own name and gives them to United for cash. United does not know about the theft or the forged signatures and presents the checks to State Bank,which pays them. Pauline,who was not negli-gent,discovers the forgeries and asks State Bank to recredit her ac-count. Who suffers the loss on each check?

Accepted Answer

The answer of Nick steals two checks from Pauline-a blank...

Question 7

Britney loses her Campus Bank access card. She realizes her loss the next day but waits a week to call the bank. Meanwhile,Drake finds and uses Britney's card to withdraw $3,000 from Britney'saccount.
-Refer to Fact Pattern 24-1. When Britney receives her Campus Bank statement,she demands that the bank investigate the matter and recredit his account. The bank
A)has no duty to investigate.
B)must investigate and,if the dispute is not resolved within ten days,recredit Britney'saccount (at least until the dispute is resolved).
C)must investigate and immediately recredit Britney'saccount (at least until the dispute is resolved).
D)must investigate but need not recredit Britney'saccount.

Accepted Answer

The bank has a duty to investigate the matter and if the dispute is not resolved within ten days, it must recredit Britney's account (at least until the dispute is resolved). The fact that Britney lost her card and waited a week to report it does not absolve the bank of its responsibility to investigate and protect its customer's account from unauthorized transactions.

Question 8

On Monday,Ellery deposits in her account at Fiscal Bank a local check for $500. After 5:00 p.m. on Friday,from these funds,Ellery can withdraw no more than
A)$100.
B)$400.
C)$500.
D)$600.

Accepted Answer

The answer of On Monday,Ellery deposits in her account at...

Question 9

On Friday morning,Geoff deposits into his account at Heartland Bank a $500 check from Imelda,who also has an account at Heartland. On that same day,this check is considered
A)cashiered.
B)certified.
C)paid.
D)a provisional credit.

Accepted Answer

The check from Imelda is not cashiered or certified, as those require specific actions from the bank and the person who wrote the check. It is also not considered paid yet, as the funds need to clear first. However, Heartland Bank will provide Geoff with a provisional credit of $500 for depositing the check, meaning the funds are available for him to use immediately.

Question 10

Smith & Jones Associates is a business customer of Town Bank. Under federal law,Smith & Jones cannot demand
A)any proof of payment except Town'sgood 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.

Accepted Answer

Under federal law, business customers like Smith & Jones Associates cannot demand that their original checks be returned with their monthly statements. The bank may provide them with substitute checks or digital images instead. However, business customers are still entitled to receive monthly statements that show their account activity and balances.

Question 11

When processing a check,Savings & Trust Bank encodes information,such as the amount of the check,on the item. Savings & Trustthereby warrants to any subsequent bank or payor that
A)the item has been returned to the drawer.
B)none of the choices.
C)the check has been processed manually.
D)the encoded information is correct.

Accepted Answer

Savings & Trust Bank encodes information on the check to ensure that the amount written on the check matches the amount that is being processed. By doing so, the bank warrants to any subsequent bank or payor that the encoded information is correct.

Question 12

On an automated teller machine (ATM)belonging to USA Bank,Sven placed a card-skimming device to pull information from the magnetic strips of users' debit cards. The device then transmitted the stolen data to thieves who used it to gain access to,and empty,the bank accounts of the users,including Megan. Megan learned of the theft the next day and promptly notified USA. Is Megan entitled to a recredit of her account for the most of the loss due to the theft? Explain.

Accepted Answer

The answer of On an automated teller machine (ATM)belonging to...

Quiz 24: Banking in the Digital Age

Ridgetop 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

Jackie inserts a debit card issued by her bank into a machine and keys in her personal identification number. She is then able to withdraw $500 in cash. Jackie is using

Britney loses her Campus Bank access card. She realizes her loss the next day but waits a week to call the bank. Meanwhile,Drake finds and uses Britney's card to withdraw $3,000 from Britney'saccount. -Refer to Fact Pattern 24-1.Britney is responsible for

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

On Monday,Ellery deposits in her account at Fiscal Bank a local check for $500. After 5:00 p.m. on Friday,from these funds,Ellery can withdraw no more than

On Friday morning,Geoff deposits into his account at Heartland Bank a $500 check from Imelda,who also has an account at Heartland. On that same day,this check is considered

Smith & Jones Associates is a business customer of Town Bank. Under federal law,Smith & Jones cannot demand

When processing a check,Savings & Trust Bank encodes information,such as the amount of the check,on the item. Savings & Trustthereby warrants to any subsequent bank or payor that