Question 1

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

Accepted Answer

A point-of-sale system is a type of electronic fund transfer system that allows customers to pay for goods or services using credit cards, debit cards, or other electronic payment methods.

Question 2

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

Accepted Answer

This is one of the functions of the Federal Reserve System as a central clearinghouse for checks and other financial instruments.

Question 3

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 4

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 that Kris presented to Metro Bank is a check, which is a special type of draft drawn on a bank and ordered the bank to pay a fixed amount of money on demand. A commercial wire transfer is the electronic transfer of funds between banks or businesses, a debit card transaction receipt is a record of an electronic transaction made with a debit card, and a cash transaction involves the physical exchange of money. None of these options accurately describe the instrument presented to Metro Bank.

Question 5

Today, most checks are processed manually.

Accepted Answer

Most checks are now processed electronically, using automated clearing houses (ACH) or mobile deposit technologies.

Question 6

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. Out of the given options, only (B) fits this description.

Question 7

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 payee, as he is the one receiving the $250 from Albert.

Question 8

A forged indorsement does not transfer title.

Accepted Answer

A forged indorsement means that the signature on the check or other negotiable instrument has been faked or altered. As a result, the indorsement is invalid and does not transfer ownership or title to the check or instrument.

Question 9

A check can be retained at its place of deposit and only its image can be presented for payment under an electronic presentment agreement.

Accepted Answer

This is true, as the check is converted into an electronic image for processing and payment.

Question 10

Stored-value cards are a form of digital cash.

Accepted Answer

Stored-value cards, also known as prepaid cards, allow users to load a certain amount of money onto the card and use it for purchases, similar to digital cash.

Question 11

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

The Electronic Fund Transfer Act (EFTA) provides consumers with 60 days to notify their financial institution of any errors or unauthorized transactions on their statements. After receiving notice, the financial institution must investigate and correct the error within a certain timeframe.

Question 12

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 true according to the Check Clearing for the 21st Century Act, also known as Check 21, which was enacted in 2004. It allows banks to create digital copies of checks and process them electronically, resulting in faster check processing times and quicker access to funds for customers. Therefore, once the bank receives the funds in a digital format, they must credit the customer's account promptly.

Question 13

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 14

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

Accepted Answer

A customer is responsible for reviewing their bank statements and reporting any irregularities or discrepancies, including forged signatures, within a reasonable timeframe to the bank to request recovery of funds.

Question 15

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, after which it is obligated to process the payment by verifying the check's authenticity and ensuring that sufficient funds are available.

Question 16

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

Accepted Answer

Gaining unauthorized access to an electronic fund transfer system is a violation of the Computer Fraud and Abuse Act (CFAA) and is considered a felony offense.

Question 17

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 one writing and signing the check, making her the drawer. The payee is Scholar University, the one who will be receiving the funds. The certifier is someone who adds their guarantee to the check, and the drawee is the bank where the funds will be drawn from.

Question 18

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 type of negotiable instrument that orders a bank to pay a specified amount of money from the writer's account to the person or entity named on the check. The other options (commercial wire transfer, note, substitute check) do not fit the description given in the question.

Question 19

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

Accepted Answer

This is known as "warrant of encoding" and is a common practice in the banking industry to ensure the accuracy of information encoded on an item.

Question 20

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...

Quiz 14: Checks and Banking in the Digital Age