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Exam 24: Banking in the Digital Age

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Question 21

True/False

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The general rule is that the bank must recredit the customer's account when it pays on a forged signature.

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Question 22

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With respect to processing checks for payment, the Uniform Commercial Code governs the relationships of banks with

A) their customers.
B) the Federal Reserve.
C) only other banks.
D) all of the choices.

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Question 23

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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

Gillis writes a check to Harley as payment for a video game but soon discovers it is broken. He goes to the drawee bank and orally authorizes Ilene, a bank officer, to stop payment on the check. This order is valid for

Ervin signs a check "pay to the order of Felicia" drawn on Ervin's account in Garden Fields Bank. Based on a valid legal ground, 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

The bank on which a check is drawn is the depositary bank .

To be liable for an overdraft, the customer must have preauthorized the payment of the overdrafts.

A stop-payment order can be given orally.

When a bank draws a check on itself, the check is called a certified check .

When the customer's negligence substantially contributes to a forgery, the bank normally is still obliged to recredit the customer's account.

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

The drawer, drawee, or payee of a check can order the bank not to pay it when it is presented for payment.

If a customer's debit card is lost or stolen and used without his or her permission, the customer is required to pay the full amount.

A bank is not obligated to honor a stale check.

If a bank pays a check in spite of a stop-payment order, the bank is not obligated to recredit the customer's account.

Gary writes a check drawn on Hillside Bank for $400 "payable to Ian" on May 1. Gary dies on May 3. Ian presents the check to the bank on May 5. Unaware of Gary's death, the bank

Faye forges Greta's signature on a check "payable to the order of Faye" drawn on Greta's account in Hearthside Bank. Most likely, if the bank pays the check

Checks serve as a substitute for cash.

Ken presents an instrument that states "pay to the order of Laura" to Metro Bank for payment. This is the most common type of negotiable instrument regulated by the Uniform Commercial Code, which is

Brandy forges Caleb's signature on a check "payable to the order of Brandy" drawn on Caleb's account in Downtown Bank. Caleb's forged signature is