Question 1

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 that the encoded information, such as the amount of the check, is correct, meaning that it has been accurately processed and recorded.

Question 2

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

A substitute check is a paper reproduction of the original check that is made by a bank. It contains an image of both the front and back of the original check and is considered a legal copy that can be used in the same manner as the original check. Certified checks and cashier's checks are not the same as substitute checks, as they are different types of payments. A void check is a check that has been canceled and cannot be used for payment.

Question 3

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 4

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

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

Question 5

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 considered a provisional credit because the funds are not immediately available for withdrawal. The bank needs to verify the funds before the check can be cleared, so the money is temporarily credited to Geoff's account as a provisional credit. The other options do not apply in this scenario. A cashiered check is one that has been exchanged for cash, a certified check is one that has been verified by the bank, and a paid check is one that has been completely cleared and the funds are available for withdrawal.

Question 6

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...

Question 7

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 from Ethel, who committed the forgery.

Question 8

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 will have to recredit Daisy's account because it is the bank's responsibility to verify the authenticity of endorsements on checks drawn on its accounts. When the bank pays out on a forged endorsement, it typically must bear the loss and recredit the account of the person who wrote the check, in this case, Daisy.

Question 9

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 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

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 12

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.

Quiz 18: Banking in the Digital Age

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​

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​

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​

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​

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​

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​

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

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

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

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

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

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

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

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