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ITB REVIEW

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					ITB Q2 REVIEW

True/False
Indicate whether the statement is true or false.

____    1. Forgery is a crime.
____    2. A certified check is a personal check for which the bank has guaranteed payment.
____    3. Traveler's checks require the user to sign the check twice.
____    4. A bank statement provides a summary of activities for a checking account, usually covering a one-month
           period.
____    5. When preparing a bank reconciliation, an outstanding check must be subtracted from the bank-statement
           balance.
____    6. Everyone has a basic right to credit.
____    7. 2/10, n/30 means that the bill does not have to be paid for 30 days.
____    8. Immediate possession is one of the advantages of credit.


Multiple Choice
Identify the choice that best completes the statement or answers the question.

____    9. The person to whom a check is written is the ____.
           a. drawer                                         c. payee
           b. drawee                                         d. forger
____   10. "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
____   11. Writing another person's signature on a check without his or her permission is ____.
           a. forgery                                        c. postdating
           b. overdrawing                                    d. scaling
____   12. Writing checks for more than the amount deposited in an account is called ____.
           a. stopping payment                               c. postdating
           b. forgery                                        d. overdrawing
____   13. 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
____   14. 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
____   15. When accepting a check, be sure to ____.
           a. watch the person sign the check
           b. know the person's name
           c. obtain proper identification
           d. request an overdraft
____ 16.   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
____ 17.   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
____ 18.   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
____ 19.   Which of the following does NOT appear on a check?
           a. drawee                                        c. cashier
           b. drawer                                        d. payee
____ 20.   Which of the following would be a reason to stop payment on a check?
           a. accept a check from someone you know
           b. accept a check from someone who has proper identification
           c. the drawer has money on deposit
           d. accept a check from a stranger
____ 21.   Which of the following sources does NOT sell money orders?
           a. restaurant                                    c. telegraph office
           b. bank                                          d. post office
____ 22.   A traveler's check is a ____.
           a. personal check for which a bank has guaranteed payment
           b. personal form for the traveler to use in making payments
           c. form of payment that orders the issuing agency to pay the amount printed on the form to
               another party
           d. personal form for the traveler to use in making charges
____ 23.   A good check writing tip is ____.
           a. write checks in ink
           b. write checks only on forms provided by the bank
           c. write checks only if you have money in your account to cover them
           d. all of the above
____ 24.   An example of an electronic funds transfer is ____.
           a. banks are instructed automatically to take funds out of an account
           b. employer pays the salary directly to the employee's account
           c. move funds from an ATM
           d. all of the above
____ 25.   Which of the following checks may NOT be guaranteed by the financial institution?
           a. certified check                               c. traveler's check
           b. cashier's check                               d. personal check
____ 26.   Overdrawing is ____.
           a. writing checks for cash
           b. writing checks for more than you have in your account
           c. writing checks on unauthorized forms
           d. writing checks using a date later than the date the check is written
____ 27. Which of the following is a correct statement?
         a. Your employer can pay you through a money order.
         b. You may be charged a fee for a stop-payment check.
         c. It is a wise business decision to post date your checks as you write them.
         d. The bearer is the owner of the account and the person who signs the checks.
____ 28. Which of the following is NOT written in the checkbook register?
         a. date
         b. check amount
         c. check number
         d. name of the financial institution
____ 29. The process of returning and paying checks within the banking system is called ____.
         a. reconciliation                                c. clearing
         b. forgery                                       d. overdrawing
____ 30. 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
____ 31. 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
____ 32. 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
____ 33. For an individual checking account, the total of checks that cleared over the past month would be reported on
         a ____.
         a. bank statement                                c. deposit slip
         b. bank reconciliation                           d. clearinghouse account report
____ 34. 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
____ 35. The document prepared to show agreement between the bank balance and the customer's checkbook balance
         is a ____.
         a. bank statement                                c. canceled check report
         b. bank reconciliation                           d. check register
____ 36. Which check is one that has not yet been presented for payment?
         a. overdrawn                                     c. forged
         b. canceled                                      d. outstanding
____ 37. 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
____ 38. 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
____ 39. Check clearing may be done through a ____.
         a. bank                                          c. the Federal Reserve System
         b. clearinghouse                                 d. all of the above
____ 40. Checks that have been paid are called ____.
         a. postdated                                     c. canceled
         b. returned                                      d. overdrawn
____ 41. Who has the legal responsibility once a stop-payment order has been issued?
         a. bank customer                                 c. the Federal Reserve System
         b. bank                                          d. clearinghouse
____ 42. The purpose of a bank statement is to ____.
         a. assist a person to open a checking account
         b. report mistakes for electronic banking transactions
         c. report transactions for a checking account
         d. assist a person to open a savings account
____ 43. What information does NOT appear on a bank statement?
         a. mistakes made by the bank during the month
         b. the beginning and ending balances
         c. deposits made during the month
         d. service charges
____ 44. Which of the following is NOT part of reconciling a bank statement?
         a. looking at the bank statement
         b. finding the differences between the balance on the bank statement and the balance in the
             checkbook
         c. finding the outstanding checks and deduct them from the bank statement
         d. finding the deposits not recorded in the checkbook and adding them in the checkbook
             register
____ 45. When looking at the bank statement and completing the reconciliation process, the interest earned as well as
         any deposit made should be added to the ____.
         a. checkbook register and bank statement
         b. bank statement and reconciliation form
         c. checkbook register and reconciliation form
         d. checkbook register only
____ 46. To obtain the best value for your financial services dollar ____.
         a. consider convenience only
         b. investigate and compare services offered
         c. do not consider fees and charges as they are all the same
         d. consider safety only
____ 47. Which of the following federal government agencies is involved in check clearing activities ____.
         a. National Credit Union Administration
         b. Federal Deposit Insurance Corporation
         c. Federal Reserve System
         d. American Express Company
____ 48. The purpose of a clearinghouse is ____.
         a. selling government bonds to investors
         b. settling accounts among different banks for checks being presented for payment
         c. setting interest rates charged for loans
           d. reporting errors for electronic banking transactions
____ 49.   Anyone who buys on credit or receives a loan is known as the ____.
           a. lender                                        c. creditor
           b. debtor                                        d. obligator
____ 50.   If you go to a bank and apply for an installment, you are trying to get ____.
           a. loan credit                                   c. sales credit
           b. trade credit                                  d. none of the above
____ 51.   If you charge a purchase at the time you buy a good or service, you are using ____.
           a. loan credit                                   c. sales credit
           b. trade credit                                  d. none of the above
____ 52.   A business that receives an invoice with the terms 2/10, n/30 ____.
           a. must pay the entire amount right away
           b. must pay $10 now and $30 later
           c. can deduct 2% from the amount owed if payment is made within ten days
           d. does not have any time limit on the amount to be paid
____ 53.   Which of the following are typical uses of credit by American consumers?
           a. buying fairly expensive products              c. borrowing to pay taxes
           b. paying for medical care                       d. all of the above
____ 54.   Which of the following is NOT true about credit references?
           a. They are important to creditors.
           b. They are usually ignored by creditors.
           c. They may be asked to verify a credit record.
           d. They may be asked about a bill payment record.
____ 55.   Your honesty and willingness to pay your debts is called ____.
           a. capacity                                      c. capital
           b. character                                     d. none of the above
____ 56.   The value of your possessions is called ____.
           a. capacity                                      c. capital
           b. character                                     d. all of the above
____ 57.   Which of the following is a benefit of credit?
           a. establishing a credit rating
           b. buying larger quantities of things you want
           c. not having to shop around
           d. getting lower prices for merchandise
____ 58.   Which of the following is NOT a disadvantage of credit?
           a. careless buying                               c. overuse
           b. overbuying                                    d. savings
____ 59.   Which type of credit is offered through financial institutions?
           a. loan credit                                   c. uninsured credit
           b. sales credit                                  d. trade credit
____ 60.   What percent of consumers never pay off their credit balances?
           a. 10%                                           c. 50%
           b. 25%                                           d. 75%
____ 61.   Which one of the following questions would NOT be appropriate to answer when giving credit information?
           a. Who are two credit references?
           b. How much do you earn?
           c. How long have you worked for your present employer?
           d. What is your social security number?
____ 62. Which one of the following is NOT a factor when granting credit?
         a. convenience                                      c. character
         b. capacity                                         d. capital
____ 63. Which of the following is NOT an advantage of credit?
         a. customers will buy more and the businesses will profit
         b. customers can shop without carrying cash
         c. customers can shop too frequently and spend too much
         d. customers can have immediate possession of the item
____ 64. 3/10, n/30 means ____.
         a. the bill has to be paid by the 3rd or 10th of the month rather than on the 30th
         b. the bill has to be paid by the 30th
         c. the bill, if paid within 10 days gets a discount of 3%, if not the full payment is due in 30
             days
         d. the bill, if paid within 3 days gets a discount of 10%, if not the full payment is due in 30
             days
____ 65. When U-No Books purchased $300 worth of merchandise, they agreed to the terms 4/10, n/30. What was the
         total cost since the bill was paid in full in 30 days?
         a. $12                                              c. $300
         b. $288                                             d. $312
____ 66. U-No Books decided to pay the bill early. What was the cost?
         a. $12                                              c. $300
         b. $288                                             d. $312
____ 67. Which of the following are uses of credit by American consumers?
         a. buying homes                                     c. borrowing to pay taxes
         b. buying cars                                      d. all of the above
____ 68. Which of the following is NOT a disadvantage of credit?
         a. shop wisely and buy only what is needed c. save
         b. seek out lower prices                            d. all of the above
____ 69. A charge account in which you agree to pay a fixed amount each month to cover purchases of gas or
         electricity is called ____.
         a. a revolving charge account                       c. a regular charge account
         b. a budget charge account                          d. none of the above
____ 70. Which of the following is true about a revolving charge account?
         a. A finance charge is added if the total amount owed is not paid.
         b. There is usually a maximum that can be owed at any one time.
         c. Some payment is required each month.
         d. all of the above
____ 71. Which of the following would make it possible for a teenager to get a credit card in his or her name?
         a. if she or he had a part-time job
         b. if she or he had good grades in school
         c. if she or he got a parent or guardian to cosign the agreement
         d. none of the above
____ 72. Which of the following causes business owners to like bank credit cards?
         a. Banks determine whether the customer is a good risk.
         b. The bank assumes most of the trouble and expense of granting credit.
         c. Businesses get their money, less a fee, immediately.
         d. all of the above
____ 73. Which of the following is true about T & E cards?
         a. Card holders pay yearly membership fees.
           b. There generally is no spending limit.
           c. Generally, the balances due must be paid in full each month.
           d. all of the above
____ 74.   Goods that are quite expensive and can last a long time usually are purchased using ____.
           a. installment sales credit                       c. T & E credit cards
           b. oil company credit cards                       d. none of the above
____ 75.   A partial payment of the purchase price is called ____.
           a. a finance charge                               c. a regular payment
           b. a down payment                                 d. none of the above
____ 76.   A loan in which you do not pay anything until the end of the loan period is called ____.
           a. a collateral loan                              c. a single-payment loan
           b. an installment loan                            d. a promissory note
____ 77.   A written promise to pay based on a debtor's excellent credit rating is known as ____.
           a. a collateral loan                              c. a single-payment loan
           b. an installment loan                            d. a promissory note
____ 78.   Which of the following is true about a cosigner of a note?
           a. The cosigner is responsible for the payment of the note.
           b. The cosigner must be a friend or relative.
           c. The credit rating of the cosigner is unimportant.
           d. all of the above
____ 79.   The three types of charge accounts are ____.
           a. revolving, special, finance                    c. budget, finance, revolving
           b. revolving, regular, budget                     d. special, finance, regular
____ 80.   Which of the following is NOT true of a bank card?
           a. there is no annual fee
           b. there may be a finance charge
           c. the cardholder has a good credit rating
           d. a credit sales slip may be asked of the merchant
____ 81.   Which of the following is true of installment sales credit?
           a. purchases are quite expensive and last for a long time
           b. finance charges are added to the cost of the purchases
           c. a contract is issued by the seller that requires periodic payments by the purchaser
           d. all of the above
____ 82.   Which of the following is NOT a special feature of installment sales credit?
           a. there is no written agreement
           b. goods are received and owned at the time of purchase
           c. a partial payment is due at the time of purchase
           d. make regular payments at stated times
____ 83.   Which of the following persons can get a loan based on a promissory note?
           a. one who owns property
           b. one who gets a friend or relative as the cosigner
           c. one who has a good credit rating
           d. all of the above
____ 84.   A loan that has collateral backing up the amount borrowed is called a(n)
           a. installment loan                               c. credit card loan
           b. single-payment loan                            d. secured loan
____ 85.   Which of the following is an alternative to charge-account buying?
           a. travel and entertainment cards                 c. a loan
           b. oil company cards                              d. none of the above
____ 86. Which of the following can be a disadvantage of a revolving account?
         a. a finance charge is added if the total amount owed is not paid
         b. there is usually a maximum that can be owed at any one time
         c. a payment is required each month but the total amount owed is not required
         d. all of the above
____ 87. Which of the following offer budget accounts?
         a. banks                                        c. oil companies
         b. utility companies                            d. all of the above


Completion
Complete each statement.

      88. Writing another person's signature on a check without authority to do so is ____________________.
      89. ____________________ is writing a check for more than you have in your account.
      90. A check that a bank draws on its own in-house funds is called a(n) ____________________ check.
      91. The person to whom a check is written is the ____________________.
      92. A(n) ____________________ is a monthly record of transactions from your financial institution.
      93. A(n) _________________________ is prepared to show agreement between the checkbook balance and the
          bank-statement balance.
      94. Credit is the privilege of using someone else's ____________________.
      95. The ____________________ is the one who sells on credit or makes a loan.

				
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