SELF TEST QUESTIONS

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  1. What is the relationship that exists between a bank and its customer?1
  2. State an obligation a bank has to its customers.1
  3. Explain how a central bank clearing system works.2
  4. Identify three separate items which appear on a cheque.3
  5. What does it mean when a cheque is crossed with A/c payee?3
  6. What is meant by endorsing a cheque?3
  7. Give two examples of payments that may be made by direct debit and standing order.3
  8. What details appear on a cheque counterfoil?4
  9. What is meant by a designated signatory?4
  10. Distinguish between a credit card and a debit card.5
  11. What are BACS payments usually used for?6
  12. Explain what makes a cheque invalid.7
  1. Why is it important to reconcile a paying-in slip with its appropriate supporting documentation?8
  2. Are credit card vouchers included on the normal paying-in slip when paying in money at the bank?8
  3. Why should businesses try to pay monies received into their bank account as promptly as possible?9
  4. State a procedure that would improve the security of taking cash to the bank.9

EXAM-STYLE QUESTIONS

1 What is the bank clearing system?

AAgreeing a loan or overdraft between bank and customer
BThe transfer of cheques between the payees bank to payment at the drawers bank
CThe electronic transfer of funds enabling a supplier to be instantly paid by debit card
DChecking customer references before they are given a credit card

2 Which is unique to a bank customer?

AAccount number
BCheque number
CDrawee
DSort code

3 A parent makes a recular monthly payment from their account to their childs bank account to cover living expenses during their time at college or university.

What method of payment is the parent using?

AAccount payee crossed cheque
BBACS
CDirect debit
DStanding order

4 A bank dishonours a cheque on a partnership account because there are insufficient funds on the account. Who must now pay the outstanding amount?

AThe bank
BThe partnership
CThe payee of the cheque
DThe person who was the authorised signatory
  1. Why is it important to reconcile a paying-in slip with its appropriate supporting documentation? 8
  2. Are credit card vouchers included on the normal paying-in slip when paying in money at the bank? 8
  3. Why should businesses try to pay monies received into their bank account as promptly as possible? 9
  4. State a procedure that would improve the security of taking cash to the bank. 9

EXAM-STYLE QUESTIONS

1 What is the bank clearing system?

A Agreeing a loan or overdraft between bank and customer

B The transfer of cheques between the payees bank to payment at the drawers bank

C The electronic transfer of funds enabling a supplier to be instantly paid by debit card

D Checking customer references before they are given a credit card

2 Which is unique to a bank customer?

A Account number

B Cheque number

C Drawee

D Sort code

3 A parent makes a regular monthly payment from their account to their childs bank account to cover living expenses during their time at college or university. What method of payment is the parent using?

A Account payee crossed cheque

B BACS

C Direct debit

D Standing order

4 A bank dishonours a cheque on a partnership account because there are insufficient funds on the account. Who must now pay the outstanding amount?

A The bank

B The partnership

C The payee of the cheque

D The person who was the authorised signatory

5 When banking cash, general security procedures should be followed wherever possible. Which of the following is the most risky?

A Ensuring that the employee taking the cash to the bank or night safe is accompanied by another employee

B Going to the bank or the night safe at different times of day or by a different route

C Using the same responsible employee to take the cash to the bank

D Using a security firm to transport the cash to the bank if necessary

For suggested answers, see the Answers section at the end of the book.