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Exam 24: Banking in the Digital Age

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Question 1

Multiple Choice

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Smith & Jones P.A. is a business customer of Tri-State Bank. Under federal law, Smith & Jones cannot demand

A) any proof of payment except the bank's good faith.
B) monthly statements.
C) recrediting of its account on payment of a forged item.
D) the return of its original checks with its monthly statements.

E) A) and D)
F) B) and D)

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Question 2

Multiple Choice

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Quinn signs a check "pay to the order of Ronda" drawn on Quinn's account in Suburban Bank. Quinn has $400 in his account but the amount of the check is $500, which the bank pays. This is

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

E) B) and C)
F) A) and D)

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Question 3

True/False

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A bank may contractually shift to its customer the risk of forged checks created electronically or otherwise by the use of non-manual signatures.

If a check is dishonored for insufficient funds, the bank on which the check is drawn is liable to the payee or to the holder in a civil suit.

The contractual rights and duties of the bank and the customer depend on the nature of the transaction.

If any part of a commercial electronic fund transfer is covered by the Electronic Fund Transfer Act, the entire transaction is excluded from UCC Article 4A.

Shane issues a check drawn on Thrifty Bank to Farm Supply Store to pay for a rototiller. Later, Shane discovers a defect in the device and orders Thrifty to stop payment on the check. Shane does not renew the order, and the bank clears the check eight months later. The bank

Whoever takes an instrument with a forged indorsement cannot become a holder because a forged indorsement does not transfer title.

Online payment systems are not yet among the most common types of electronic fund transfer systems.

Dallas presents an uncertified check for payment more than six months after its date. The check was drawn by Emma on her account in First Bank. If the bank follows the usual banking practice in such a case, it will

A paper check must be presented for payment-it cannot be retained at its place of deposit, with only its image or description presented electronically.

Both stored-value cards and smart cards contain microchips with security programming that can authenticate the validity of a financial transaction.

Bok buys an espresso machine from Coffee Gadgets, which bills him for $100. He writes out a check drawn on Dios Bank, but later, believing that the machine is defective, issues a stop-payment order. Dios

Dana draws a check on Equity Bank, and asks the bank to agree in advance to accept the check by setting aside sufficient funds to cover the amount. If Equity agrees, the check will be considered

The bank on which a check is drawn is the depositary bank.

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

If a bank does not dishonor an "on-us" item by the opening of the second banking day following its receipt, the check is considered paid.

Beca signs a check "pay to the order of City College" drawn on Beca's account in Delta Bank to pay her tuition. Beca is

When a bank certifies a check, the bank is agreeing in advance to accept the check when it is presented for payment and to make payment with funds reserved for the purpose.

Curt issues a check payable to Discount Mart. Ethel, Discount's cashier, forges the store's indorsement and deposits the check in her bank account. Curt's bank, Farmers Bank, pays the check. Curt can recover from