Question 1

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

Clyde can recover from the bank because the bank paid on a forged indorsement, which is unauthorized. The bank can then seek to recover the funds from Ethel, who committed the forgery.

Question 2

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 signature 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 negligent, discovers the forgeries and asks State Bank to recredit her account. Who suffers the loss on each check?

Accepted Answer

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

Question 3

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

Accepted Answer

According to federal law, business customers are not entitled to the return of their original checks with their monthly statements.

Question 4

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​

Accepted Answer

The check is not considered cashiered or certified because it has not been endorsed and guaranteed by the bank. It is also not considered paid immediately since it needs to go through the clearing process. Therefore, the best choice is D, a provisional credit, which means the bank has temporarily credited the funds to Geoff's account while the check is being processed.

Question 5

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​

Accepted Answer

Funds from a local check are typically available within 1-2 business days. By Friday after 5:00 p.m., the full $500 should be available for withdrawal.

Question 6

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

The answer of Finance Bank receives a check drawn on...

Question 7

Misty's debit card, issued by National United Bank, is stolen and used without her permission. She tells the bank within thirty days. She may be required to pay no more than​

Accepted Answer

The answer of Misty's debit card, issued by National United...

Question 8

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

Accepted Answer

Sterling Bank warrants to any subsequent bank or payor that the encoded information, such as the amount of the check, is correct.

Question 9

Daisy signs a check "pay to the order of Ewan" drawn on Daisy's account in Finance Bank. Graham forges Ewan's indorsement. Finance Bank pays the check. Most likely​

Accepted Answer

Finance Bank is responsible for verifying endorsements before paying out on a check. Since Ewan's endorsement was forged, Finance Bank must recredit Daisy's account.

Question 10

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...

Question 11

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

The paper reproduction created by Ridgeline Bank is known as a substitute check which is a legal copy of the original check. It can be used in the same way as the original check, making it easier for customers to process check payments. A certified check is a check that has been verified by the bank to have sufficient funds, while a cashier's check is issued by the bank itself. A void check is a canceled check that is no longer valid.

Question 12

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

The answer of Maya uses e-money consisting of funds stored...

Quiz 28: Banking in the Digital Age

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​

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

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​

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​

Misty's debit card, issued by National United Bank, is stolen and used without her permission. She tells the bank within thirty days. She may be required to pay no more than​

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

Daisy signs a check "pay to the order of Ewan" drawn on Daisy's account in Finance Bank. Graham forges Ewan's indorsement. Finance Bank pays the check. Most likely​

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​

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​

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

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

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

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

Misty's debit card, issued by National United Bank, is stolen and used without her permission. She tells the bank within thirty days. She may be required to pay no more than

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

Daisy signs a check "pay to the order of Ewan" drawn on Daisy's account in Finance Bank. Graham forges Ewan's indorsement. Finance Bank pays the check. Most likely

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

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