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Exam 19: Checks and Banking in the Digital Age

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Question 31

Multiple Choice

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Liu signs a check "pay to the order of Marv" drawn on Liu's account in National Bank.Liu later orders National not to pay the check,but the bank pays it over Liu's order.Subsequent checks written on Liu's account "bounce." Most likely liable for the costs to Liu is

A) any party to whom a subsequent check was written.
B) Liu.
C) Marv.
D) National.

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Question 32

Multiple Choice

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Thelma signs a check "pay to the order of Uri" drawn on Thelma's account in Verity Bank.Thelma has $400 in her account but the amount of the check is $500,which the bank pays.This is

A) a dishonored check.
B) an overdraft.
C) a postdated check.
D) a stale check.

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Question 33

True/False

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The Federal Reserve System acts as a clearinghouse where banks exchange checks.

Elmer can write checks on his account at Finance Bank.Gina steals the checks,forges Elmer's signature,and cashes the checks at Finance. The bank is excused from any liability if,after receipt of the first forged check,Elmer fails to report the forgeries within

Tiny authorizes United Bank to make transfers from his account to make payments on his debt to Vic's Auto Dealership,which sold Tiny the car that serves as collateral for the debt.After three payments,Vic's repossesses the car and refuses to return it.Tiny phones the bank to stop the payments and follows up with a confirm?ing letter.The bank fails to stop the next two payments,and Vic's refuses to refund anything.Can Tiny get his money from the bank? Explain.

Dina's debit card,issued by Eminent Bank,is stolen and used without Dina's permission.Dina tells Eminent Bank within thirty days.Dina may be required to pay no more than

A check is a special type of certificate of deposit.

Dan writes a check to Emma on his account at First State Bank.The bank dishonors the check even though Dan has sufficient funds in his account.The bank is

A bank is subject to a civil suit if its customer writes a bad check.

Kris presents an instrument that states "pay to the order of Liv" to Metro Bank for payment.This is a special type of draft drawn on a bank,ordering the bank to pay a fixed amount of money on demand.This is

A bank cannot recover from a holder who cashes a check bearing a forged indorsement once the bank has accepted and paid the item.

Dhani signs a check "pay to the order of Etan" drawn on Dhani's account in First State Bank and dates the check "May 1." Etan presents the check to the bank for payment on December 15.This is

First Community Bank agrees to accept a check by setting aside sufficient funds to cover the amount.This check is considered

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

Guaranty Bank receives a check drawn on the account of Get-Rich Industries,Inc.,one of the bank's customers,at 3 p.m.Friday.Garry,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

Dora writes a check for $100 drawn on Eastern Bank and presents it to Fast Cash,Inc.,for payment.If the check is not backed by sufficient funds,Dora may be prosecuted for

Generally,a cash deposit is not available for withdrawal until the next business day.

Currently,it is not clear which,if any,laws apply to the security of e-money payment information.

A bank that encodes information on an item after its issue warrants to any subsequent bank that the information is correct.

John writes a check to Kay as payment for a DVD player but soon discovers the player is broken.He goes to the drawee bank and orally authorizes Larry,a bank officer,to stop payment on the check.This order is valid for