Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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The person to whom a check is written is the
a. | drawer | c. | payee | b. | drawee | d. | forger |
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2.
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“Drawee” refers to the
a. | owner of a checking account | b. | bank or other financial
institution | c. | person to whom a check is written | d. | person who endorses a
check |
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3.
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Writing another person’s signature on a check without his or her
permission is
a. | forgery | c. | postdating | b. | overdrawing | d. | scaling |
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4.
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Writing checks for more than the amount deposited in an account is called
a. | stopping payment | c. | postdating | b. | forgery | d. | overdrawing |
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5.
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A postdated check refers to a check that is
a. | dated later than the date on which it is written | b. | written
illegally | c. | written by someone not authorized on the account | d. | void after a certain
number of days |
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6.
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If a check is lost, you should consider completing
a. | a signature card | c. | an overdraft request | b. | a stop-payment order | d. | a forged check |
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7.
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A certified check is a
a. | check issued by a federal government agency | b. | check that a
financial institution draws on its own funds | c. | personal check being sent to a company in
another country | d. | personal check for which a bank has guaranteed
payment |
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8.
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Which of the following is a check that a bank draws on its own in-house
funds?
a. | money order | c. | certified check | b. | traveler’s check | d. | cashier’s
check |
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9.
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A person without a checking account who needs to send money to a company in
another state would probably use a
a. | certified check | c. | personal check | b. | money order | d. | traveler’s
check |
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10.
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The process of returning and paying checks within the banking system is called
a. | reconciliation | c. | clearing | b. | forgery | d. | overdrawing |
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11.
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A clearinghouse has the main purpose of
a. | setting interest rates charged for loans. | b. | determining the risk
associated with different types of consumer loans | c. | selling government bonds to
investors | d. | settling accounts among different banks for checks being presented for
payment |
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12.
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The federal government agency involved in check clearing activities is
the
a. | Federal Reserve System | b. | Federal Deposit Insurance
Corporation | c. | National Credit Union Administration | d. | Comptroller of the
Currency |
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13.
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A bank statement has the purpose of
a. | insuring a savings account | b. | reporting transactions for a checking
account | c. | reporting errors for electronic banking transactions | d. | assisting a person
to open a checking account |
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14.
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Canceled checks are those that have
a. | not cleared the banking system | b. | been issued illegally | c. | cleared the banking
system | d. | stop-order payments issued for them |
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15.
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The document prepared to show agreement between the bank balance and the
customer’s checkbook balance is
a. | bank statement | c. | canceled check report | b. | bank
reconciliation | d. | check
register |
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16.
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Which check is one that has not yet been presented for payment?
a. | overdrawn | c. | forged | b. | canceled | d. | outstanding |
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17.
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When preparing a bank reconciliation, outstanding checks are
a. | subtracted from the bank balance | b. | added to the bank balance | c. | added to the
checkbook balance | d. | subtracted from the checkbook
balance |
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18.
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When doing a bank reconciliation, which of the following is added to the
checkbook balance?
a. | outstanding checks | c. | interest earned | b. | canceled checks | d. | service fees |
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