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Exam 18: Banking in the Digital Age

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Question 21

Multiple Choice

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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​

A) ​Ethel, but not the bank.
B) ​the bank, which cannot recover from Ethel.
C) ​the bank, which can recover from Ethel.
D) ​neither Ethel nor the bank.

E) All of the above
F) A) and C)

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Question 22

Multiple Choice

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

A) ​an oversight.
B) ​an overdraft.
C) ​a certified check.
D) ​a stale check.

E) None of the above
F) All of the above

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Question 23

Multiple Choice

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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​

Each bank in a collection chain must pass a check on before midnight of the day of its receipt.

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

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

Ian buys a phone in Jiffy Mart, using the means that accounts for more retail payments than any other. This means of payment is​

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.

The first bank to receive a check for payment is the intermediary bank.

Any local check deposited must be available for withdrawal by check or as cash within one business day from the date of deposit.

Joni writes Keizer an uncertified check for $500 drawn on Joni's account at Labor Employees Credit Union. Seven months later, Keizer presents the check for payment. The credit union pays the check in good faith without consulting Joni. The credit union​

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​

A customer can stop payment on a check that has been certified or accepted by a bank.

A customer can escape liability for failing to notify the bank of forged or altered checks when the customer can prove that the bank was negligent.

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

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​

The incompetence of a customer revokes a bank's authority to pay an item.

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​

An agency relationship arises between the customer and the bank when the customer writes a check on his or her account.

A bank's duty to honor its customer's check is subject to the stipulation that the account has sufficient funds to pay the check.