Question 1

Rikki signs a check "pay to the order of Scholar University" drawn on Rikki's account in Town Bank to pay her tuition. Rikki is
A) the certifier.
B) the drawee.
C) the drawer.
D) the payee.

Accepted Answer

Rikki is the person writing the check, making her the drawer. "Pay to the order of Scholar University" designates the payee, and the bank where Rikki has an account is the drawee. Rikki is not a certifier as there is no certification involved in this transaction.

Question 2

A point-of-sale system is a type of electronic fund transfer system.

Accepted Answer

A point-of-sale system (POS) is a type of electronic fund transfer system that allows customers to make purchases with debit or credit cards. It transfers funds electronically from the customer's bank account to the merchant's bank account.

Question 3

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

Accepted Answer

The depositary bank is the first bank to receive a check for payment. This bank is responsible for processing the check and either depositing the funds into the recipient's account or forwarding the check to the paying bank.

Question 4

A customer must examine a bank statement and report any discovered forged signa?ture to recover from the bank for the forgery.

Accepted Answer

If a customer discovers a forged signature on their bank statement, it is their responsibility to report it to the bank in order to begin the process of recovering any lost funds.

Question 5

Scott presents an instrument that states "pay to the order of Scott" to Town Bank for payment. This instrument is the most common type of negotiable instrument, which is
A) a commercial wire transfer.
B) a check.
C) a note.
D) a substitute check.

Accepted Answer

A check is a written order to a bank to pay a certain sum of money to the person named on the check (in this case, Scott). It is a common type of negotiable instrument because it can be transferred from the payee (Scott) to another party through endorsement.

Question 6

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

Accepted Answer

The answer of Each bank in a collection chain must...

Question 7

Ian buys a cell phone in Jiffy Mart, using the means that accounts for more retail payments than any other. This means of payment is
A) a commercial check.
B) a debit card.
C) a personal check.
D) a cash.

Accepted Answer

According to the given information, the means of payment that accounts for more retail payments than any other is most likely a debit card. Therefore, Ian most likely used a debit card to buy the cell phone in Jiffy Mart.

Question 8

A customer has sixty days from the date of receipt of a statement of an electronic transfer to notify the financial institution of any er?rors.

Accepted Answer

This is true according to the Electronic Fund Transfer Act and Regulation E.

Question 9

A bank cannot recover from a party who cashes a check bearing a forged drawer's signature once the bank has accepted and paid the item.

Accepted Answer

The answer of A bank cannot recover from a party...

Question 10

Stored-value cards are a form of digital cash.

Accepted Answer

Stored-value cards, also known as prepaid cards, are a type of electronic payment that stores a certain amount of money in a digital format, which can then be used to make purchases. They can be used similarly to cash and are considered a form of digital currency.

Question 11

Albert buys a surround sound system from his neighbor George at George's garage sale. Albert writes George a check for $250 for the sound system. George is
A) the certifier.
B) the drawee.
C) the drawer.
D) the payee.

Accepted Answer

George is the one who receives the check for $250, making him the payee in this transaction. A certifier is a bank employee who confirms that there are sufficient funds in the account to cover the check, a drawee is the financial institution that the check is drawn on, and the drawer is the person who writes the check (in this case, Albert).

Question 12

Kris presents an instrument that states "pay to the order of Kris" 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) a commercial wire transfer.
B) a check.
C) a debit card transaction receipt.
D) a cash transaction

Accepted Answer

The instrument presented by Kris is a check, which is a written order directing a bank or credit union to pay a fixed amount of money on demand to the check's holder (in this case, Kris).

Question 13

Under the Check Clearing in the 21st Century Act, a bank has to credit a customer's account as soon as the bank receives the funds.

Accepted Answer

This is correct. The Check Clearing in the 21st Century Act, also known as Check 21, requires banks to credit a customer's account as soon as they receive the funds from a check, even if the physical check has not yet been received. This allows for faster processing and availability of funds.

Question 14

Banks can replace original with substitute checks.

Accepted Answer

Banks have the authority to create substitute checks in place of original checks for purposes such as electronic processing and storage.

Question 15

A forged indorsement does not transfer title.

Accepted Answer

A forged indorsement is not valid and therefore does not transfer title to the holder of the check or negotiable instrument.

Question 16

Gaining unauthorized access to an electronic fund transfer system is a felony.

Accepted Answer

This is stated in the Electronic Fund Transfer Act, making it a federal crime punishable by fines and imprisonment.

Question 17

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

Accepted Answer

The Federal Reserve System does act as a clearinghouse where banks exchange checks. This process helps to ensure that the funds are correctly transferred between accounts and that there are no discrepancies or errors.

Question 18

If a customer's debit card is lost or stolen, the customer will not be liable for any unauthorized use of the card.

Accepted Answer

The answer of If a customer's debit card is lost...

Question 19

Today, most checks are processed manually.

Accepted Answer

Today, most checks are processed electronically through Automated Clearing House (ACH) systems.

Question 20

A substitute check is a paper reproduction of the front and back of an original check.

Accepted Answer

A substitute check, also known as a image replacement document (IRD), is a paper reproduction of the front and back of an original check created by a bank or other financial institution. It is considered a legal equivalent to the original check and is used in place of the original when the original check is not available.

Quiz 22: Checks and Banking in the Digital Age

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