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Exam 29: Checks and Electronic Fund Transfers

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Question 1

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"Employee Problems." Harold, who is 97 years old, runs a successful hardware store. He never had any trouble with dishonest employees in the past. Unfortunately, he hired an assistant accountant, Renee, who had significant financial problems and began to steal from Harold. Renee came in early and took the rubber stamp of his signature that Harold kept in an unlocked drawer along with some checks and used the signature stamp to create a check payable to her. She then took it to the bank and cashed it. Harold, who was diligent in examining his bank statements, noticed the unauthorized check to Renee. He also noticed an unauthorized check cashed by Susie, another employee. Susie did not know about the stamp in the unlocked drawer and instead broke into Harold's personal office, stole checks from a locked cabinet, and skillfully forged his name. Harold immediately informed his bank about the check involving Renee. He held off, however, on informing the bank about Susie, who was twenty five, because he knew she had incurred some significant vet bills for her Corgi dogs, Baby and Bre. Harold also thought he might ask Susie for a date. Harold, who was honest, told the bank manager what he suspected had happened involving Renee taking his stamp and checks from the unlocked drawer. The bank manager told Harold that the bank was not required to reimburse Harold because Harold was responsible for his own losses. A few weeks later, Harold asked Susie out on a date. She told him that she couldn't go because she had started dating her veterinarian. Harold is very grumpy and tells the bank manager about the unauthorized check to Susie 35 days after he received his bank statement and discovered the forgery. Unfortunately, when Harold opened his next bank statement, it was discovered that after she wrote the first check, there had been several other forgeries by Susie. The bank was notified of those forgeries within 15 days of when Harold received his bank statement. The bank refused to reimburse Harold for the checks written by Susie again claiming that he was responsible for his own losses. Becoming grumpier by the minute, Harold institutes litigation against the bank. -Set forth the characteristics that a traveler's check must have.

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A traveler's check must:
(1) Be payable ...

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Question 2

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Set forth the requirements for a check to be considered properly payable.

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For a check to be considered properly payable, it must: (1) Have the drawer's authorized signature on the check; (2) Be paid to a person entitled to enforce the check; (3) Not have been altered; (4) Not have been completed by addition of unauthorized terms if the check was incomplete; (5) Be paid on or after the date of the check; and (6) Not be subject to a stop payment from the drawer.

Question 3

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Which of the following governs the transfer of checks between banks?

Which of the following is the bank ultimately responsible for granting funds for a check?

A[n] ______ bank is the first bank that receives the check for payment.

Which of the following allows a consumer to directly transfer funds from a banking account to a merchant?

If a check is not presented to a bank within ____________ of its date, the check is considered stale check.

When money is transferred by an electronic terminal, telephone, or computer, this transfer is called a[n] ____.

Banks are required by the UCC to certify the check if a customer has sufficient funds in the account.

Unlike in the United States, in India money orders may be issued only by the post office.

A[n] ______ check is a check that is accepted at the bank at which it is drawn.

According to the UCC, a check is a special kind of draft.

If a customer makes a deposit over ____, the depositary bank may place an 8-day hold on the funds.

A written stop-payment order is valid for only 30 days.

In which of the following types of checks does the bank draw on itself to pay a specific person?

Which of the following is a deposit that is preauthorized and performed on a customer's account through an electronic terminal?

Which of the following is false regarding certified checks?

"Employee Problems." Harold, who is 97 years old, runs a successful hardware store. He never had any trouble with dishonest employees in the past. Unfortunately, he hired an assistant accountant, Renee, who had significant financial problems and began to steal from Harold. Renee came in early and took the rubber stamp of his signature that Harold kept in an unlocked drawer along with some checks and used the signature stamp to create a check payable to her. She then took it to the bank and cashed it. Harold, who was diligent in examining his bank statements, noticed the unauthorized check to Renee. He also noticed an unauthorized check cashed by Susie, another employee. Susie did not know about the stamp in the unlocked drawer and instead broke into Harold's personal office, stole checks from a locked cabinet, and skillfully forged his name. Harold immediately informed his bank about the check involving Renee. He held off, however, on informing the bank about Susie, who was twenty five, because he knew she had incurred some significant vet bills for her Corgi dogs, Baby and Bre. Harold also thought he might ask Susie for a date. Harold, who was honest, told the bank manager what he suspected had happened involving Renee taking his stamp and checks from the unlocked drawer. The bank manager told Harold that the bank was not required to reimburse Harold because Harold was responsible for his own losses. A few weeks later, Harold asked Susie out on a date. She told him that she couldn't go because she had started dating her veterinarian. Harold is very grumpy and tells the bank manager about the unauthorized check to Susie 35 days after he received his bank statement and discovered the forgery. Unfortunately, when Harold opened his next bank statement, it was discovered that after she wrote the first check, there had been several other forgeries by Susie. The bank was notified of those forgeries within 15 days of when Harold received his bank statement. The bank refused to reimburse Harold for the checks written by Susie again claiming that he was responsible for his own losses. Becoming grumpier by the minute, Harold institutes litigation against the bank. -Which of the following is true regarding whether Harold will have to bear the loss on the first forged check by Susie?

Which of the following would be stored electronically on microchips, magnetic strips, or other computer media and would allow for the elimination of physical currency?

Which of the following is the party giving the order to pay on a draft?