Question 1

Refer to Fact Pattern 15-1. When Britney receives her Campus Bank statement, she demands that the bank investigate the matter and recredit heraccount. The bank
A)has no duty to investigate.
B)must investigate and, if the dispute is not resolved within ten days, recredit Britney's account (at least until the dispute is resolved).
C)must investigate and immediately recredit Britney's account (at least until the dispute is resolved).
D)must investigate but need not recredit Britney's account.

Accepted Answer

Under the Electronic Fund Transfer Act (EFTA), banks are required to investigate disputes and provisionally recredit the consumer's account within ten business days if the dispute is not resolved.

Question 2

Keanu delivers an instrument to Laura that states 'pay to the order of Laura'. Laura then presents the instrument to MegaBank for payment. This instrument is the most common type of negotiable instrument, which is
A)a certificate of deposit.
B)a check.
C)a note.
D)a payment via a mobile device.

Accepted Answer

A check is a negotiable instrument that orders a bank to pay a specific amount of money from a person's account to the person in whose name the check has been issued.

Question 3

Tomas writes a check for $1,000 drawn on Urban Bank and presents it to Viola. Viola presents the check for payment to Urban Bank, which dishonors it because of insufficient funds. The party most likely liable to Viola is
A)Tomas in a civil suit.
B)Tomas in a criminal prosecution.
C)Urban Bank in a civil suit.
D)Urban Bank in a criminal prosecution.

Accepted Answer

Tomas is liable to Viola in a civil suit because he wrote the check without having sufficient funds in his account to cover it.

Question 4

Riley pays State Bank $500 plus a service fee to draw a check on itself payable to Torque Plumbing. The party responsible for paying the check is​
A)Riley.
B)State Bank.
C)Torque Plumbing.
D)Torque Plumbing's bank.

Accepted Answer

State Bank is responsible for paying the check because it is the bank that issued the check on itself, making it the drawee.

Question 5

Refer to Fact Pattern 15-1. Britney is responsible for​
A)$0.
B)$50.
C)$500.
D)$3,000.

Accepted Answer

The answer of Refer to Fact Pattern 15-1. Britney is...

Question 6

Homer can write checks on his account at InterCity Bank. Jemma steals the checks, forges Homer's signature, and cashes the checks at InterCity. The bank is excused from any liability if, after receipt of the bank statement following the first forged check, Homer fails to report the forgery within
A)fourteen days.
B)thirty days.
C)six days.
D)six months.

Accepted Answer

Under the Uniform Commercial Code (UCC), a customer must report any unauthorized signatures or alterations to their bank within 30 days of receiving the bank statement that includes the first forged check. If the customer fails to do so, the bank is typically excused from liability for subsequent forgeries by the same wrongdoer.

Question 7

Drew signs a check "pay to the order of Eastern State University" drawn on Drew's account in Fidelity Bank to pay her tuition. Drew is​
A)none of the choices.
B)the drawee.
C)the drawer.
D)the payee.

Accepted Answer

Drew is the person who is writing the check, which makes her the drawer.

Question 8

Dhani signs a check "pay to the order of Eton" drawn on Dhani's account in Fidelity Guaranty Bank and dates the check "May 1." Eton presents the check to the bank for payment the following December 15. This is
A)an oversight.
B)an overdraft.
C)a certified check.
D)a stale check.

Accepted Answer

A check is considered stale if it is presented for payment more than six months after its date. Since the check was dated May 1 and presented on December 15, it is a stale check.

Question 9

Franco buys a sound system from Georg at Georg's garage sale. Franco writes Georg a check for $250 to pay for the system. Georg is​
A)none of the choices.
B)the drawee.
C)the drawer.
D)the payee.

Accepted Answer

Georg is the recipient of the check, making him the payee.

Question 10

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)an on-us item.

Accepted Answer

An "on-us item" refers to a check that is deposited and drawn on the same bank, meaning both the depositor and the issuer have accounts at Heartland Bank.

Question 11

Rico buys a meal in Sushi Bowl using the simplest kind of e-money system. This means of payment is
A)a smart card.
B)a stored-value card.
C)a check.
D)cash.

Accepted Answer

A stored-value card is a simple form of e-money that allows users to store a certain amount of money on the card to make purchases.

Question 12

Gillian writes a check to Harris as payment for a video game player but soon discovers the player is broken. She goes to the drawee bank and orally authorizes Ilene, a bank officer, to stop payment on the check. This order is valid for​
A)fourteen days.
B)one year.
C)six days.
D)six months.

Accepted Answer

The answer of Gillian writes a check to Harris as...

Question 13

Jackie inserts a debit card issued by her bank into a machine and keys in her personal identification number. She then withdraws $500 in cash. Jackie used​
A)an automated teller machine.
B)a point-of-sale system.
C)a direct deposit system.
D)an Internet payment system.

Accepted Answer

Jackie used an automated teller machine (ATM) to withdraw cash using her debit card and personal identification number.

Question 14

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 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
A)Saturday.
B)Sunday.
C)Monday.
D)Wednesday.

Accepted Answer

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

Question 15

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​
A)must certify the check.
B)may pay the check.
C)must consult with Gary's heirs before paying the check.
D)can do nothing until Ivan claims an interest in the account.Fact Pattern 15-1 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's account.

Accepted Answer

The bank may pay the check because it was presented within a reasonable time and the bank was unaware of Gary's death.

Question 16

Travis signs a check "pay to the order of Umberto" drawn on Travis's account in Valley Bank. Travis has $400 in his account but the amount of the check is $500, which the bank pays. This creates
A)a dishonored check.
B)an overdraft.
C)an oversight.
D)a stale check.

Accepted Answer

An overdraft occurs when a bank allows a customer to withdraw more money than is available in their account, resulting in a negative balance. In this case, Travis's account had $400, but the bank paid a $500 check, creating an overdraft.

Question 17

When processing a check, Savings & Trust Bank encodes information, such as the amount of the check, on the item. Savings & Trust thereby 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 warrants that the encoded information on the check (such as the amount) is correct, but they do not warrant that the item has been returned to the drawer or that the check was processed manually. Option B is incorrect because it does not represent a valid answer.

Question 18

Marta has a checking account with Neighbors Bank. Marta signs a check "payable to Olive" drawn on Marta's account. Neighbors Bank is
A)none of the choices.
B)the drawee.
C)the drawer.
D)the payee.Fact Pattern 15-1 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's account.

Accepted Answer

Neighbors Bank is the drawee because it is the bank on which the check is drawn and is responsible for paying the amount specified on the check from Marta's account.

Question 19

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

Accepted Answer

Garden Fields Bank is likely liable for the costs to Ervin since they paid the check over his order. Felicia may also be liable if she knew that Ervin had ordered the bank not to pay the check. The subsequent parties who received bounced checks are not necessarily liable unless they were aware that Ervin had insufficient funds in the account.

Question 20

O'Shea issues a check drawn on Prime Bank to Quality Equipment Supply to pay for a backhoe. Later, O'Shea discovers a defect in the backhoe and orders the bank to stop payment on the check. O'Shea does not renew the order, and the bank clears the check eight months later. The bank​
A)must recredit O'Shea's account.
B)must obtain funds from Quality to cover the amount of the check.
C)must substitute acceptable goods.
D)need not recredit O'Shea's account.

Accepted Answer

O'Shea's order to stop payment on the check was not renewed, so the bank cleared the check eight months later. Therefore, the bank need not recredit O'Shea's account.

Quiz 15: Banking in the Digital Age

Refer to Fact Pattern 15-1. When Britney receives her Campus Bank statement, she demands that the bank investigate the matter and recredit heraccount. The bank

Keanu delivers an instrument to Laura that states 'pay to the order of Laura'. Laura then presents the instrument to MegaBank for payment. This instrument is the most common type of negotiable instrument, which is

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

Riley pays State Bank $500 plus a service fee to draw a check on itself payable to Torque Plumbing. The party responsible for paying the check is​

Refer to Fact Pattern 15-1. Britney is responsible for​

Homer can write checks on his account at InterCity Bank. Jemma steals the checks, forges Homer's signature, and cashes the checks at InterCity. The bank is excused from any liability if, after receipt of the bank statement following the first forged check, Homer fails to report the forgery within

Drew signs a check "pay to the order of Eastern State University" drawn on Drew's account in Fidelity Bank to pay her tuition. Drew is​

Dhani signs a check "pay to the order of Eton" drawn on Dhani's account in Fidelity Guaranty Bank and dates the check "May 1." Eton presents the check to the bank for payment the following December 15. This is

Franco buys a sound system from Georg at Georg's garage sale. Franco writes Georg a check for $250 to pay for the system. Georg is​

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

Rico buys a meal in Sushi Bowl using the simplest kind of e-money system. This means of payment is

Gillian writes a check to Harris as payment for a video game player but soon discovers the player is broken. She goes to the drawee bank and orally authorizes Ilene, a bank officer, to stop payment on the check. This order is valid for​

Jackie inserts a debit card issued by her bank into a machine and keys in her personal identification number. She then withdraws $500 in cash. Jackie used​

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​

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

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

Marta has a checking account with Neighbors Bank. Marta signs a check "payable to Olive" drawn on Marta's account. Neighbors Bank is

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​

O'Shea issues a check drawn on Prime Bank to Quality Equipment Supply to pay for a backhoe. Later, O'Shea discovers a defect in the backhoe and orders the bank to stop payment on the check. O'Shea does not renew the order, and the bank clears the check eight months later. The bank​

Riley pays State Bank $500 plus a service fee to draw a check on itself payable to Torque Plumbing. The party responsible for paying the check is

Refer to Fact Pattern 15-1. Britney is responsible for

Drew signs a check "pay to the order of Eastern State University" drawn on Drew's account in Fidelity Bank to pay her tuition. Drew is

Franco buys a sound system from Georg at Georg's garage sale. Franco writes Georg a check for $250 to pay for the system. Georg is

Gillian writes a check to Harris as payment for a video game player but soon discovers the player is broken. She goes to the drawee bank and orally authorizes Ilene, a bank officer, to stop payment on the check. This order is valid for

Jackie inserts a debit card issued by her bank into a machine and keys in her personal identification number. She then withdraws $500 in cash. Jackie used

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

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

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

O'Shea issues a check drawn on Prime Bank to Quality Equipment Supply to pay for a backhoe. Later, O'Shea discovers a defect in the backhoe and orders the bank to stop payment on the check. O'Shea does not renew the order, and the bank clears the check eight months later. The bank