Business Law Quiz: Endorsement & Negotiable Instruments

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  • 1/10 Questions

    One who is to receive the money is called:

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About This Quiz

This quiz covers key aspects of endorsement and negotiable instruments in business law, including check handling, secure payment methods, and electronic fund transfers.

Finance Quizzes & Trivia

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  • 2. 

    One who writes the check is called:

    Explanation
    The person who writes the check is called the drawer. This term is commonly used in banking and finance to refer to the individual who signs the check and authorizes the payment. The drawer is usually the person who holds the bank account from which the funds will be withdrawn. They are responsible for ensuring that there are sufficient funds in the account to cover the amount specified on the check. The drawer's signature on the check serves as a form of authorization for the payment to be made.

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  • 3. 

    Daniel is going on vacation and does not wish to take cash. Which type of negotiable instrument should he take with him?

    • Cashier's check

    • Large cash bills

    • Money order

    • Traverler's Check

    Correct Answer
    A. Traverler's Check
    Explanation
    Daniel should take traveler's checks with him because they provide a safe and convenient way to carry money while traveling. Traveler's checks are preprinted, fixed-amount checks that can be used like cash but can be replaced if lost or stolen. They are widely accepted and can be easily exchanged for local currency at banks or currency exchange offices. Unlike cash or large cash bills, traveler's checks offer added security and peace of mind, making them a suitable choice for someone who does not want to carry cash while on vacation.

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  • 4. 

    What does EFT mean?

    Correct Answer
    Electronic Funds Transfer
    Explanation
    EFT stands for Electronic Funds Transfer. It is a method of transferring money electronically from one bank account to another. This can be done through various electronic systems such as online banking, mobile banking, or wire transfers. EFT eliminates the need for physical checks or cash, making transactions faster, more convenient, and secure.

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  • 5. 

    If I don't have enough money in the bank to cover a check it is called?

    Correct Answer
    insufficient funds
    bad check
    Explanation
    When someone does not have enough money in their bank account to cover a check, it is referred to as "insufficient funds." This means that there is not enough money available to complete the transaction. Another term that can be used in this situation is "bad check," which also implies that the check cannot be honored due to a lack of funds. Both terms essentially convey the same meaning in this context.

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  • 6. 

    Lorin is very careful when writing checks. Which check writing procedure does she use to avoid negligence when writing a check?

    • Changing the figures and written amount

    • Not signing check

    • Writing close to "pay to Order of

    • Writing figures only

    Correct Answer
    A. Writing close to "pay to Order of
    Explanation
    Lorin uses the check writing procedure of writing close to "pay to Order of" to avoid negligence when writing a check. By writing close to this section, Lorin ensures that there is no room for anyone to alter or change the payee information on the check. This helps to prevent any fraudulent activity or mistakes in the payee details, making her check writing process more careful and secure.

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  • 7. 

    John wrote a check to Sharon and he called the bank to have a put on the check

    Correct Answer
    stop payment
    Explanation
    In this scenario, John wrote a check to Sharon but later decided to cancel or prevent the payment from being processed. To do so, he contacted the bank and requested a "stop payment" on the check. This means that the bank is instructed not to honor the check if it is presented for payment. Therefore, "stop payment" is the correct answer in this context.

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  • 8. 

      Checking accounts are also known as:  

    Correct Answer
    demand deposits
    Explanation
    Checking accounts are commonly referred to as demand deposits because the funds deposited in these accounts can be withdrawn at any time on demand by the account holder. This distinguishes them from other types of accounts, such as savings accounts, where there may be restrictions on the frequency or amount of withdrawals. The term "demand deposits" emphasizes the liquidity and accessibility of the funds in a checking account.

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  • 9. 

    Karen is preparing the daily deposit of checks for her sporting goods business. Which endorsement should she use on the checks to make the deposit?

    • Blank

    • Restrictive

    • Special/Full

    • Transfer

    Correct Answer
    A. Special/Full
    Explanation
    Karen should use the Special/Full endorsement on the checks to make the deposit. This endorsement allows the checks to be deposited only into the specific account mentioned on the check. It ensures that the funds are not redirected to any other account and provides security for the business.

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  • 10. 

    What is stale check?

    Correct Answer
    Check that is more that 6 months old
    Explanation
    A stale check refers to a check that has been in circulation for more than 6 months. After this time period, banks may consider the check to be expired and may refuse to process it. This is because the information on the check, such as the account number and signature, may no longer be valid or accurate. Therefore, it is important to cash or deposit a check within a reasonable time frame to avoid it becoming stale.

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Dec 03, 2008
    Quiz Created by
    Tddavid
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