Zachary, Who Has Been Authorized to Write a Check from a Company

Zachary, who has been authorized to write a check from a company account to pay employees, draws bonus checks from the company account for five imaginary employees; endorses the checks in their names; and deposits those into his own bank account. Which of the following is true regarding whether the company will be required to take the loss on the checks?

A) Under the fictitious payee rule, the company will be required to take the loss on the checks unless the company can obtain the funds from Zachary.
B) Under the imposter rule, the company will be required to take the loss on the checks unless the company can obtain the funds from Zachary.
C) Under the transferor rule, the company will be required to take the loss on the checks unless the company can obtain the funds from Zachary.
D) Under the employee-liability rule, the company will be able to recover from any bank that cashed the check in addition to Zachary.
E) Under the banking liability act, the company will be able to recover from any bank that cashed the check in addition to Zachary.