Question 1

Commercial banking practices consider a check that has been outstanding for three months to be a stale check.

Accepted Answer

False

Question 2

The rights and duties of a bank and its customer are contractual.

Accepted Answer

The relationship between a bank and its customer is based on a contract, which outlines the rights and duties of each party. This contract can include terms related to account access, fees, interest rates, and other important details of the banking relationship.

Question 3

If a customer does not have sufficient funds to pay a check available in his or her checking account and the bank dishonors the check, the bank is liable to the customer.

Accepted Answer

If a customer does not have sufficient funds to pay a check available in his or her checking account and the bank dishonors the check, the bank is not liable to the customer. Instead, the customer may be charged an insufficient funds fee by the bank and may also face legal consequences for writing a bad check.

Question 4

When a customer deposits cash into a checking account, he or she becomes a debtor for the amount deposited.

Accepted Answer

When a customer deposits cash into a checking account, the bank becomes the debtor for the amount deposited. The customer becomes a creditor or owner of the funds held by the bank.

Question 5

The Uniform Commercial Code governs checks.

Accepted Answer

The Uniform Commercial Code, or UCC, governs many aspects of commercial transactions, including checks.

Question 6

A check is a special type of draft.

Accepted Answer

A check is a specific type of draft that a bank orders its customer to pay a specific amount of money to another party.

Question 7

A bank that pays a customer's check with a forged drawer's signature can generally pass the loss onto the customer.

Accepted Answer

The answer of A bank that pays a customer's check...

Question 8

A customer who writes a bad check may be subject to criminal prosecution.

Accepted Answer

Writing a bad check is a form of fraud and can result in criminal charges.

Question 9

A bank may contractually shift to the customer the risk of forged checks created by the use of facsimile or other nonmanual signatures.

Accepted Answer

Some banks have clauses in their contracts that hold customers responsible for any losses incurred due to forged checks created using electronic signatures.

Question 10

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

Accepted Answer

Once a check has been certified or accepted by a bank, the customer no longer has the right to stop payment on it.

Question 11

A bank has no right to charge a customer's account for the amount of a stale check.

Accepted Answer

The answer of A bank has no right to charge...

Question 12

A written stop payment order is valid for only thirty days.

Accepted Answer

The answer of A written stop payment order is valid...

Question 13

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

Accepted Answer

The incompetence of a customer does not revoke a bank's authority to pay an item. The bank may still choose to pay the item, but the customer may be held responsible for any resulting fees or overdrafts. It is ultimately up to the bank's policies and discretion.

Question 14

A check is not a substitute for cash.

Accepted Answer

The answer of A check is not a substitute for...

Question 15

A bank may not pay any checks on a customer's account after the date of the customer's death.

Accepted Answer

The answer of A bank may not pay any checks...

Question 16

A bank is not obligated to pay an uncertified check presented less than six months from its date.

Accepted Answer

A bank is obligated to pay an uncertified check presented within six months from its date, according to the Uniform Commercial Code. After six months, the check becomes stale and the bank may refuse to honor it.

Question 17

An oral stop payment order is valid for fourteen days.

Accepted Answer

An oral stop payment order is valid for fourteen days in the United States, unless the customer provides a written confirmation of the stop payment order within that time frame.

Question 18

A forged signature is effective as the signature of a drawer to the extent that is resembles the drawer's actual signature.

Accepted Answer

The answer of A forged signature is effective as the...

Question 19

A certified check is a check that has been signed by a notary public.

Accepted Answer

A certified check is a check that the bank has verified that there are sufficient funds in the account to cover the check, and the bank has set aside those funds to ensure that the check will be honored. It does not require a notary public signature.

Question 20

A bank is not responsible for determining whether a signature on a customer's check is genuine.

Accepted Answer

The answer of A bank is not responsible for determining...

Quiz 19: Checks and Banking in the Digital Age