Question 1

Money orders are considered checks under the UCC.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is true regarding parties who are related to an order?

Accepted Answer

A)   A drawer, payee, and drawee are all related to an order.
B)   A payee and drawer are related to an order, but a drawee is not.
C)   A drawee and payee are related to an order, but a drawer is not.
D)   A payee is related to an order, but a drawer and a drawee are not.
E)   A drawer and a drawee are related to an order, but a payee is not.F) A) and D)
G) A) and E)

Question 3

The ______ bank is the bank upon which a check is drawn.

Accepted Answer

A)   Payor
B)   Payee
C)   Depositary
D)   Transfer
E)   AcceptorF) B) and D)
G) A) and D)

Question 4

A[n] ______ is a special draft that orders the bank to pay a fixed amount of money on demand.

Accepted Answer

A)   Note
B)   Promissory note
C)   Check
D)   Acknowledgment draft
E)   Promissory draftF) B) and E)
G) B) and D)

Question 5

Under the ____, a bank has a duty to pay checks from a customer's account so long as the check is properly payable.

Accepted Answer

A)   Account rule
B)   Properly payable rule
C)   Payability in fact regulation
D)   Check pay rule
E)   There is no such rule.F) A) and E)
G) B) and D)

Question 6

Which of the following is true regarding entities considered banks under the UCC?

Accepted Answer

A)   Savings and loans and trust companies are considered banks, but credit unions are not.
B)   Savings and loans and credit unions are considered banks, but trust companies are not.
C)   Trust companies and credit unions are considered banks, but savings and loans are not.
D)   Savings and loans, credit unions, and trust companies are all considered banks.
E)   Only an entity holding itself out as a "bank" is considered a bank under the UCC, and therefore neither savings and loans, credit unions, nor trust companies are considered banks.F) B) and D)
G) All of the above

Question 7

Bruce buys a used car from Tony for $5,000. The car is in great shape and Bruce leaves town in it. Bruce paid Tony with a cashier's check, but decided that he would rather not pay at all. Accordingly, he told the bank the check was stolen. What rights, if any, would Tony have and what liabilities and other problems, if any, would Bruce have?

Accepted Answer

Tony may sue and recover again...

Question 8

Which of the following is defined by the UCC as a change, without consent, that nullifies the obligation of a party to the instrument?

Accepted Answer

A)   An alteration.
B)   A defacement.
C)   A material addition.
D)   A transformation.
E)   A reformation.F) A) and B)
G) A) and C)

Question 9

When the depositary bank is the same bank as the payor bank, the check is referred to as a[n] ____.

Accepted Answer

A)   On-us item
B)   Combined item
C)   Condensed item
D)   Unitary item
E)   Uniform itemF) B) and E)
G) B) and C)

Question 10

A substitute check is a check that is substituted for a lost check.

Accepted Answer

A) True 
 B)False

Question 11

"Missing Earrings." Elaine ordered a pair of diamond stud earrings from BIG Jewelry Store. She paid in advance because the sales clerk told her that the store would have to pay the supplier before the earrings could be shipped. Later that day, Elaine found out from a friend of hers that BIG Jewelry Store was in financial trouble. Elaine was concerned and immediately called her bank and issued a stop-payment order on the check she wrote to BIG Jewelry Store. She gave the bank all of the correct information orally needed to stop-payment on the check. The bank, however, did not stop payment on the check. The check was paid, BIG Jewelry Store went bankrupt, and Elaine was unable to get either her money or the earrings from BIG Jewelry Store. Elaine asked the bank manager of the bank for a refund of the check amount. The bank manager told her that the stop-payment order was not good because it was oral and that in any event, under the UCC, banks are not liable for failing to stop payment on a check. The bank manager further told Elaine that the bank was a holder in due course, and that Elaine is liable for any damages sustained by BIG Jewelry Store or the bank based upon her attempt to stop payment on the check.
-Which of the following is correct regarding whether the bank will legally have to accept responsibility for the check presented by Renee?

Accepted Answer

A)   The bank has no responsibility to repay Harold on the basis that because Renee was an employee, the check was not considered forged.
B)   The bank will be required to repay Harold because the check was forged.
C)   Harold will have to bear the loss because the check was paid before the bank had notice of the forgery.
D)   Harold will not have to bear the loss because the forgeries were by an employee; otherwise, he would have had to bear the loss.
E)   The bank will likely not be required to repay Harold because Harold's negligence in leaving the rubber stamp with his signature readily available likely substantially contributed to the forged signature.F) B) and D)
G) A) and D)

Question 12

Which of the following governs consumer fund transactions in electronic fund transfers?

Accepted Answer

A)   The Electronic Fund Transfer Act of 1978.
B)   The Automated Transfer Act of 1990.
C)   The Electronic Banking Act of 2000.
D)   The Automated Fund Transfer Regulation of 2002.
E)   The Uniform Money Services Business Act of 1990.F) A) and B)
G) D) and E)

Question 13

Regardless of the care used in cashing a check by the bank, a customer must report a forgery within ________ from the date the bank statement showing the forgery is available to the customer or the customer will lose the right to recover.

Accepted Answer

A)   90 Days
B)   120 Days
C)   180 Days
D)   9 Months
E)   1 YearF) A) and C)
G) A) and E)

Question 14

The UCC states that a customer can postdate a check and that the customer has no obligations to give the bank notice of the postdated check.

Accepted Answer

A) True 
 B)False

Question 15

A bank may determine that _____ or later is the cutoff hour for handling checks.

Accepted Answer

A)   Noon
B)   1:00 p.m
C)   2:00 p.m
D)   3:00 p.m
E)   4:00 p.mF) A) and B)
G) A) and C)

Question 16

Which of the following is an instrument whereby one party orders the second party to pay an amount of money to the party listed on the instrument?

Accepted Answer

A)   A draft.
B)   A note.
C)   A mark.
D)   An instrument.
E)   A certificate of deposit.F) A) and E)
G) C) and D)

Question 17

The Federal Reserve System consists of ______ central banks.

Accepted Answer

A)   Six
B)   Eight
C)   Twelve
D)   Twenty
E)   ThirtyF) A) and B)
G) C) and E)

Question 18

"Bad Check." Mindy, a bank teller, saw that customer Fred did not have sufficient funds in his account to cover a check presented for payment. Mindy was new and was confused about what to do with the check. She asked the bank manager, Trevor, about any available options. Trevor told her that the bank was required by law to dishonor the check, that the check should be returned to the holder with a notation that it had been dishonored, and that it could not be presented again. Mindy asked Trevor if there were any policies the bank could institute to provide customers with overdraft protection, and Trevor answered that those were prohibited by law.
-Which of the following is true regarding Trevor's statement that the bank's only choice was to dishonor the check?

Accepted Answer

A)   Trevor is correct.
B)   Trevor is incorrect because under the UCC, the bank could have created an overdraft by paying the check and later charging the account the amount short.
C)   Trevor is incorrect because under the UCC, the bank could have created a subsequent draft by paying the check, and the bank would then have needed to seek the customer's permission to charge his account the amount short.
D)   Trevor is incorrect because under the UCC, the bank could have created a secondary draft by paying the check and charging the account the amount short.
E)   Trevor is incorrect because under the UCC, the bank could have created an excessive draft by paying the check and closing the account at which point, the customer would be free to open a new account.F) A) and E)
G) B) and C)

Question 19

Assuming the bank is not negligent, in the case of multiple forgeries by the same wrongdoer, what is the effect of a customer's failure to ever notify the bank of the first forgery in regard to subsequent forgeries?

Accepted Answer

A)   There is no effect because each forgery stands on its own.
B)   The customer is barred from recovering on the subsequent forgeries.
C)   The customer may recover on a subsequent forgery if it is reported to the bank within 5 days after the statement showing the subsequent forgery is received by the customer.
D)   The customer may recover on a subsequent forgery if it is reported to the bank within 10 days after the statement showing the subsequent forgery is received by the customer.
E)   The customer may recover on a subsequent forgery if it is reported to the bank within 15 days after the statement showing the subsequent forgery is received by the customer.F) B) and E)
G) C) and D)

Question 20

An oral stop payment order is valid for _________ unless the order is later confirmed in writing.

Accepted Answer

A)   10 Days
B)   14 Days
C)   30 Days
D)   45 Days
E)   90 DaysF) A) and B)
G) None of the above

Exam 29: Checks and Electronic Fund Transfers

Which of the following is an instrument whereby one party orders the second party to pay an amount of money to the party listed on the instrument?

Correct Answer
verified

Which of the following is true regarding parties who are related to an order?

Correct Answer
verified

An oral stop payment order is valid for _________ unless the order is later confirmed in writing.

Correct Answer
verified

The UCC states that a customer can postdate a check and that the customer has no obligations to give the bank notice of the postdated check.

Correct Answer
verified

Correct Answer
verified

The Federal Reserve System consists of ______ central banks.

Correct Answer
verified

Correct Answer
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The ______ bank is the bank upon which a check is drawn.

Correct Answer
verified

Which of the following is defined by the UCC as a change, without consent, that nullifies the obligation of a party to the instrument?

Correct Answer
verified

Regardless of the care used in cashing a check by the bank, a customer must report a forgery within ________ from the date the bank statement showing the forgery is available to the customer or the customer will lose the right to recover.

Correct Answer
verified

When the depositary bank is the same bank as the payor bank, the check is referred to as a[n] ____.

Correct Answer
verified

Money orders are considered checks under the UCC.

Correct Answer
verified

Under the ____, a bank has a duty to pay checks from a customer's account so long as the check is properly payable.

Correct Answer
verified

Which of the following governs consumer fund transactions in electronic fund transfers?

Correct Answer
verified

A[n] ______ is a special draft that orders the bank to pay a fixed amount of money on demand.

Correct Answer
verified

Which of the following is true regarding entities considered banks under the UCC?

Correct Answer
verified

Assuming the bank is not negligent, in the case of multiple forgeries by the same wrongdoer, what is the effect of a customer's failure to ever notify the bank of the first forgery in regard to subsequent forgeries?

Correct Answer
verified

Correct Answer
verified
Tony may sue and recover again...
View Answer

A bank may determine that _____ or later is the cutoff hour for handling checks.

Correct Answer
verified

A substitute check is a check that is substituted for a lost check.

Correct Answer
verified

Exam 29: Checks and Electronic Fund Transfers

Which of the following is an instrument whereby one party orders the second party to pay an amount of money to the party listed on the instrument?

Correct AnswerverifiedShow Answer

Which of the following is true regarding parties who are related to an order?

Correct AnswerverifiedShow Answer

An oral stop payment order is valid for _________ unless the order is later confirmed in writing.

Correct AnswerverifiedShow Answer

The UCC states that a customer can postdate a check and that the customer has no obligations to give the bank notice of the postdated check.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Federal Reserve System consists of ______ central banks.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The ______ bank is the bank upon which a check is drawn.

Correct AnswerverifiedShow Answer

Which of the following is defined by the UCC as a change, without consent, that nullifies the obligation of a party to the instrument?

Correct AnswerverifiedShow Answer

Regardless of the care used in cashing a check by the bank, a customer must report a forgery within ________ from the date the bank statement showing the forgery is available to the customer or the customer will lose the right to recover.

Correct AnswerverifiedShow Answer

When the depositary bank is the same bank as the payor bank, the check is referred to as a[n] ____.

Correct AnswerverifiedShow Answer

Money orders are considered checks under the UCC.

Correct AnswerverifiedShow Answer

Under the ____, a bank has a duty to pay checks from a customer's account so long as the check is properly payable.

Correct AnswerverifiedShow Answer

Which of the following governs consumer fund transactions in electronic fund transfers?

Correct AnswerverifiedShow Answer

A[n] ______ is a special draft that orders the bank to pay a fixed amount of money on demand.

Correct AnswerverifiedShow Answer

Which of the following is true regarding entities considered banks under the UCC?

Correct AnswerverifiedShow Answer

Assuming the bank is not negligent, in the case of multiple forgeries by the same wrongdoer, what is the effect of a customer's failure to ever notify the bank of the first forgery in regard to subsequent forgeries?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedTony may sue and recover again...View AnswerShow Answer

A bank may determine that _____ or later is the cutoff hour for handling checks.

Correct AnswerverifiedShow Answer

A substitute check is a check that is substituted for a lost check.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Tony may sue and recover again...
View Answer

Correct Answer
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Correct Answer
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