Ch 27 - Checks and Banking in the Digital Age TRUE/FALSE...

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Checks and Banking in the Digital Age TRUE/FALSE QUESTIONS A1. A cashier’s check is an instrument in which a bank draws a check on itself.
NAT: AACSB Analytic AICPA Legal B1. UCC Articles 3 and 4 govern checks. ANSWER: T PAGE: 544 TYPE: = NAT: AACSB Analytic AICPA Legal A2. A bank that has certified a check is under no obligation to accept it. ANSWER: F PAGE: 545 TYPE: = NAT: AACSB Analytic AICPA Legal B2. A check is a special type of certificate of deposit. ANSWER: F PAGE: 544 TYPE: N NAT: AACSB Analytic AICPA Legal A3. A person who writes a bad check is subject to a civil suit only.
NAT: AACSB Analytic AICPA Legal B3. Certified checks are instruments that have been accepted for payment by the institutions on which they are drawn.
NAT: AACSB Analytic AICPA Legal A4. A drawer is liable to the holder of a check if the check is not honored.
NAT: AACSB Analytic AICPA Legal B4. A bank is subject to a civil suit if its customer writes a bad check. ANSWER: F PAGE: 546 TYPE: = NAT: AACSB Analytic AICPA Legal
A5. Once a check “bounces,” a holder cannot resubmit it for payment.
NAT: AACSB Analytic AICPA Legal B5. Generally, a bank has no obligation to pay a customer’s overdrafts.
NAT: AACSB Analytic AICPA Legal A6. The death of a customer revokes a bank’s authority to pay an item.
NAT: AACSB Analytic AICPA Legal B6. When a check “bounces,” its holder can resubmit the check later, hoping that sufficient funds will be available.
NAT: AACSB Analytic AICPA Legal A7. A stale check is one that has been outstanding for longer than one month.
NAT: AACSB Analytic AICPA Legal B7. A bank has no right to charge a customer’s account for the amount of a stale check.
NAT: AACSB Analytic AICPA Legal A8. An oral stop payment order is valid for fourteen days.
NAT: AACSB Analytic AICPA Legal B8. The incompetence of a customer revokes a bank’s authority to pay an item.
NAT: AACSB Analytic AICPA Legal A9. A bank that pays a customer’s check with a forged drawer’s signature can generally pass the loss onto the customer.
NAT: AACSB Analytic AICPA Legal B9. A bank is obligated to pay an uncertified check presented less than six months from its date.
NAT: AACSB Analytic AICPA Legal
A10. A customer who fails to examine a bank statement and report a forged signature may be liable for later forgeries by the same wrongdoer.
NAT: AACSB Analytic AICPA Legal B10. A check carries with it an implied promise to reimburse the bank for paying the check.

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