Question 1

Fact Pattern 27-1B 
Echo takes her car to Fix-It,Inc. ,which repairs the car and bills Echo for $500.Echo writes out a check drawn on Capital Bank,but later,believing that Fix-It did not repair the car properly,issues a stop-payment order.
-Refer to Fact Pattern 27-1B.If Capital Bank pays the check,Capital

Accepted Answer

Capital Bank is liable for Echo's loss because it paid a check that was subject to a stop-payment order, making the payment wrongful.

Question 2

Kirk presents an instrument that states "pay to the order of Liv" 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

Accepted Answer

The instrument stated in the scenario is a check. It is a type of draft drawn on a bank, ordering the bank to pay a fixed amount of money on demand. The other options given are not applicable in this scenario. A certificate of deposit is a type of savings account where the holder deposits a fixed amount of money for a fixed period of time, and earns interest on it. A debit card transaction receipt is a record of a purchase made using a debit card. A trade acceptance is a type of financial instrument used in trade finance, where the seller of goods draws a draft on the buyer, who accepts it and promises to pay the amount on a fixed date in the future.

Question 3

Delilah's debit card,issued by Encarta Bank,is stolen and used without Delilah's permission.Delilah tells the bank within thirty days.Delilah may be re?quired to pay no more than

Accepted Answer

The answer of Delilah's debit card,issued by Encarta Bank,is stolen...

Question 4

Fact Pattern 27-2B 
Thom draws a check,on his account in State Bank in New York,payable to Digital Computers,Inc. ,in San Francisco.Digital deposits the check in its ac?count at First National Bank.First National deposits the check in the Federal Reserve Bank of San Francisco,which transfers it to the Federal Reserve Bank of New York.That Federal Reserve Bank sends the check to State Bank.
-Refer to Fact Pattern 27-2B.Thom's bank is

Accepted Answer

Thom's bank, State Bank, is the payor bank because it is the bank on which the check is drawn and is responsible for paying the check.

Question 5

Brendan signs a check "pay to the order of City College Bookstore" drawn on his account in Delmar Bank to pay for his current semester's textbooks.The bookstore deposits the check in its account in Evergreen Bank.Like most checks,this check is

Accepted Answer

This check is a three-party instrument since there are three parties involved:
1. Brendan, who is the drawer and the first party
2. City College Bookstore, who is the payee and the second party
3. Evergreen Bank, where the check is deposited, who is the drawee and the third party.

Question 6

Steve steals one of Tricia's checks and forges her signature.Tricia's bank,Unity Bank,pays the check.Tricia can recover from

Accepted Answer

Unity Bank can recover from Steve because he committed a crime by forging Tricia's signature and stealing her check. However, Tricia cannot recover from Unity Bank because they acted in good faith by accepting what appeared to be a legitimate check with a valid signature.

Question 7

Taki forges Uriel's signature on a check "payable to the order of Taki" drawn on Uriel's account in Verity Bank.Most likely,if the bank pays the check

Accepted Answer

Verity Bank will have to recredit Uriel's account because the signature was forged, making the check unauthorized. The bank is responsible for verifying the authenticity of signatures on checks it processes.

Question 8

Cornucopia Bank receives a check drawn on the account of Get-Rich Industries,Inc. ,one of the bank's customers,at 3 p.m.Friday.Harry,the pre?senter of the check,is not one of the bank's customers.The bank uses de?ferred posting with a 2 p.m.cutoff hour.If it decides to dis?honor the check,it must do so by midnight

Accepted Answer

The answer of Cornucopia Bank receives a check drawn on...

Question 9

On Monday,Eve deposits in her account at First State Bank a local check for $500.After 5:00 p.m.on Friday,from these funds,Eve can withdraw no more than

Accepted Answer

Local checks typically take a few business days to clear. By Friday, the check would have cleared, allowing Eve to withdraw the full $500.

Question 10

London knowingly divulges to BreakingNews.com information about Neandro's e-money payments to Oracle Oil Corporation without the consent of Neandro or Oracle.London may be in violation of federal law

Accepted Answer

If the e-payments were in electronic storage at the time, London's actions may be in violation of the Electronic Communications Privacy Act (ECPA) which prohibits the unauthorized access or disclosure of electronic communications that are in electronic storage. However, if the e-payments were not in electronic storage or were legitimately obtained, London may not be in violation of federal law. The physical evidence of the e-payments is not relevant to the potential violation of federal law in this scenario.

Question 11

Fact Pattern 27-1B 
Echo takes her car to Fix-It,Inc. ,which repairs the car and bills Echo for $500.Echo writes out a check drawn on Capital Bank,but later,believing that Fix-It did not repair the car properly,issues a stop-payment order.
-Refer to Fact Pattern 27-1B.Capital Bank

Accepted Answer

Capital Bank must stop payment if Echo issues a stop-payment order and the bank has a reasonable time to act on it.

Question 12

Fact Pattern 27-2B 
Thom draws a check,on his account in State Bank in New York,payable to Digital Computers,Inc. ,in San Francisco.Digital deposits the check in its ac?count at First National Bank.First National deposits the check in the Federal Reserve Bank of San Francisco,which transfers it to the Federal Reserve Bank of New York.That Federal Reserve Bank sends the check to State Bank.
-Refer to Fact Pattern 27-2B.When Digital's bank received the check,it was required to pass it on

Accepted Answer

When a bank receives a check, it is required to pass it on before midnight of the next banking day. In this case, Digital's bank (First National Bank) was required to pass on the check to the Federal Reserve Bank of San Francisco before the next banking day's midnight.

Question 13

Fact Pattern 27-2B 
Thom draws a check,on his account in State Bank in New York,payable to Digital Computers,Inc. ,in San Francisco.Digital deposits the check in its ac?count at First National Bank.First National deposits the check in the Federal Reserve Bank of San Francisco,which transfers it to the Federal Reserve Bank of New York.That Federal Reserve Bank sends the check to State Bank.
-Refer to Fact Pattern 27-2B.Digital's bank is

Accepted Answer

Digital's bank is the depositary bank as it received the check for deposit and transferred it to First National Bank.

Question 14

Daria writes a check for $100 drawn on Estimable Bank and presents it to Fast Cash,Inc. ,for payment.If the check is not backed by sufficient funds,Daria may be prosecuted for

Accepted Answer

Writing a check without sufficient funds is known as check fraud and is illegal, potentially resulting in prosecution. Forgery would only apply if the check were fake or not written by Daria. Negligence would apply if Daria accidentally wrote the wrong amount or made a mistake, but not if she knowingly wrote a bad check. "Nothing" is not a valid choice, as there are potential consequences for writing bad checks.

Question 15

Daisy writes a check to Elvita on her account at First Savings Bank.The bank dishonors the check even though Daisy has sufficient funds in her ac?count.The bank is

Accepted Answer

The bank is responsible for properly honoring the check if Daisy had sufficient funds in her account. Therefore, the bank would be liable to Daisy for dishonoring the check.

Question 16

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

Accepted Answer

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

Question 17

Clay issues a check payable to Discount Mart.Ernestina,Discount's cashier,forges the store's indorsement and deposits the check in her bank ac?count.Clay's bank,First Friendly Bank,pays the check.Clay can recover from

Accepted Answer

although Ernestina committed forgery, Clay's bank, First Friendly Bank, still paid the check based on the forged endorsement. As a result, First Friendly Bank acted negligently in not verifying the authenticity of Discount Mart's endorsement, and ultimately bears responsibility for the loss. Therefore, Clay can recover from First Friendly Bank and First Friendly Bank can recover from Ernestina.

Question 18

Sullivan signs a check "pay to the order of Tilly" drawn on Sullivan's account in Universal Bank.Velma forges Tilly's indorsement,Washington Bank cashes the check.Velma disappears.Universal pays Washington and debits Sullivan's account.Most likely,the ultimate loss will fall on

Accepted Answer

Washington Bank is most likely to bear the ultimate loss because it cashed the check with a forged indorsement, making it liable for accepting a check with a defective title.

Question 19

Jen signs a check "pay to the order of Key" drawn on Jen's account in Lakeland Bank to buy Key's car.Jen asks Lakeland Bank to indicate on the face of the check that it will accept it when Key presents it for payment.If the bank agrees,this will be

Accepted Answer

A certified check is a personal check that the bank certifies, indicating that the account has sufficient funds to cover the amount of the check. By indicating on the face of the check that it will accept it when Key presents it for payment, Jen is essentially asking the bank to certify the check, making it a certified check. A cashier's check is a check issued by the bank itself, and a trade acceptance is a type of specialized financial instrument used in certain types of commercial transactions. A traveler's check is a type of prepaid check used for travel purposes.

Question 20

Pippi,the manager of Quik Mart,deposits the store's receipts in its account at Regional Bank.As to the receipts,the relation?ship between Quik Mart and the bank is

Accepted Answer

The relationship between Quik Mart and the bank is that of a creditor and debtor since Quik Mart is depositing its receipts in the bank's account, thereby making the bank the creditor of the funds while Quik Mart becomes the debtor.

Quiz 27: A: Checks,the Banking System,and E-Money