Question 1

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...

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

Fact Pattern 20-1
​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.
-Refer to Fact Pattern 20-1. Britney is responsible for
A) ​$0.
B) ​$50.
C) ​$500.
D) ​$3,000.

Accepted Answer

Under the Electronic Fund Transfer Act, if a consumer reports a lost or stolen card within two business days, their liability is limited to $50. If reported within 60 days, the liability is limited to $500. Since Britney waited a week, she is liable for up to $500.

Question 4

Fact Pattern 20-1
​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.
-Refer to Fact Pattern 20-1. 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's account.

Accepted Answer

According to the Electronic Fund Transfer Act (EFTA), Britney has up to 60 days to report unauthorized transactions. She reported the loss of her card within that timeframe, and therefore, the bank must investigate the matter and recredit her account if the dispute is not resolved within ten days. However, the bank is not required to immediately recredit her account.

Question 5

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 6

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 is considered a provisional credit on the same day because the funds have been deposited but have not yet been verified and cleared by the issuing bank. This means that the funds are temporarily available for Geoff to use, but there is still a risk that the check could bounce if there are insufficient funds in Imelda's account.

Question 7

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) ​a point-of-sale system.
C) ​a direct deposit system.
D) ​an Internet payment system.

Accepted Answer

Jackie is using an automated teller machine (ATM) to withdraw cash from her bank account by inserting her debit card and entering her PIN.

Question 8

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

Accepted Answer

The paper reproduction created by Ridgetop Bank is a substitute check. This is a legal copy of the original check that can be used in the same way as the original check. Certified checks and cashier's checks are different types of checks altogether. A void check is a canceled check that cannot be used for any transactions.

Question 9

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) ​the bank, which can recover from Ethel.
D) ​neither Ethel nor the bank.

Accepted Answer

Clyde can recover from both Ethel and the bank since the bank paid the check after Ethel forged the indorsement. The bank can also recover from Ethel for committing fraud.

Question 10

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 pay or 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 is correct to any subsequent bank or payor.

Question 11

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) ​Tuesday.

Accepted Answer

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

Question 12

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

Accepted Answer

Under federal law, business customers like Smith & Jones cannot demand the return of their original checks with their monthly statements. This is because business customers are expected to keep their own records of checks written and will receive copies of checks with their statements. However, they are entitled to monthly statements, recrediting of their account on payment of a forged item, and proof of payment through the bank's good faith.

Quiz 20: Banking in the Digital Age

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

Fact Pattern 20-1 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. -Refer to Fact Pattern 20-1. Britney is responsible for

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

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

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

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

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 pay or that

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