Mann_BLRB 9_TB_Ch28

Business Law and the Regulation of Business

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Chapter 28—Bank Deposits, Collections, and Funds Transfers TRUE/FALSE 1. If a depositor in First Bank takes a check written on Valley Bank to First Bank to deposit, it will not normally be credited to his account until collected from the payor bank. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 2. If First Bank receives a check for collection on Friday at 4:30 p.m., it does not have to present the check to the payor bank by midnight Saturday. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 3. Article 4 of the UCC, entitled "Bank Deposits and Collections" provides the principal rules governing bank collection practices. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 4. Mark takes his wife's paycheck to Valley Bank to deposit in their joint account. Valley Bank may de- posit the check without his wife's indorsement unless the indorsement is expressly required. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 5. A bank is permitted by statute to remove an original paper check from the check collection process and send instead of it a substitute check. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 6. A provisional credit occurs at the time a depositary bank permits a customer to draw funds against the deposited check. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 7. If a bank pays on a check even though it has a "stop payment order," the bank is liable to the customer only if the customer can prove a loss because of the payment. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 8. A bank may pay a check after the death of its customer for ten days following the date of his death un- less a person claiming an interest in the account orders the bank to stop making such payments. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 9. Adjudication of drawer's incompetence will not affect the bank's ability to act with respect to the draw- er until the bank knows and has a reasonable opportunity to act on this knowledge. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 10. Point-of-sale systems permit customers to charge items to a charge account at a bank. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic
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11. A bank is not liable for nonpayment of an EFT transaction if the terminal has run out of cash. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 12. Collecting banks give to a transferee the same basic warranties as those given by other parties who transfer commercial paper, except they also may give encoding warranties. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 13. UCC Articles 3 and 8 cover items in the bank collection process. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 14. When a person deposits a check in his bank, the bank credits the individual's account by the amount of the check. ANS: T
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Mann_BLRB 9_TB_Ch28 - Chapter 28-Bank Deposits,...

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