Personal Finance Ch. 5

You should update your check register monthly when you receive the bank statement (TF)

False

What is meant by floating a check? What is the risk involved?

Floating a check is when you write a check while you do not have enough in your account which could be risky if it goes through because you would have to get charged a fee

___is the act of signing another persons name on a check

Forgery

___ interest is earned on both principal and previously earned interest

compound

Paying bills online is fast and convenient but much riskier than sending checks through the mail (TF)

False

When reconciling a bank statement, the amount of deposits in transit is (deducted from the bank statement balance, added to the bank statement balance, deducted from the check register balance, added to the check register balance)

Added to the bank statement balance

When you set aside a fixed amount of savings on a regular basis over time, it is called (an IRA, compound savings, an annuity, the Rule of 72)

An annuity

A ___ endorsement consists only of the payees signature

Blank

A check marked NSF and returned to the payees bank unpaid is said to have ___

Bounced

Which of the following is not a demand deposit in a bank (checking account, savings account, money market account, certificate of deposit)

Certificate of deposit

A__is a tool used to track checking accoubt transactions and keep a running balance of your account

Check register

When reconciling a bank statement, the amount of outstanding checks is (deducted from the bank statement balance, added to the bank statement balance, deducted form the check register balance, added to the check register balance)

Deducted from the bank statement balance

Which of the following would not be an adjustment to the check register balance on a bank reconciliation (service charge, interest earned, deposits in transit, NSF processing fee)

Deposits in transit

A CD is a great savings option if you want to have immediate access to the money (TF)

False

Banks will hold postdated checks and process them at the future date (TF)

False

Debit cards carry all the same protections provided with credit cards (TF)

False

Forgery occurs when someone alters a check by changing its amount to obtain more money from another (TF)

False

Online-only banks are subject to the same laws and regulations as traditional banks, but online-only bank accounts are not insured by the FDIC (TF)

False

Overdraft protection for checking accounts is automatically provided at no cost by most U.S. banks (TF)

False

What are the threee responsibilities of having a bank account

Making sure you are using it enough so you won't get charged, keeping your balance above the minimum and not going over the amount you have

Checks written that have not yet been processed by the bank are called ___ checks

Outstanding

The words "for deposit only" written above the signature of the apyere represents a ___endorement

Restrictive

The words "Pay to the order of" are included in which type of endorsement (blank endorsement, special endorsement, restrictive endorsement, all of these)

Special endoresement

A____ check is issued by the check writer to the payee, who then endorsed and transferred it to another party

Third-party

An IRA can be set up through all if the following except (a bank, the Treasury Direct website, an insurance company, a stockbroker)

Treasury Direct website

"Divisibility" refers to the fact that money is divided into denominations for ease in completing transactions

True

A checking account is also called a demand deposit account because the account holder may withdraw money on demand or write checks on the account at any time (TF)

True

A special endorsement creates a third-party check (TF)

True

Banks may charge fees for checking and savings accounts that do not meet minimum usage requirements (TF)

True

By insuring deposits in banks, the FDIC helps to promote public confidence in the U.S. financial system (TF)

True

If a U.S. savings bond us redeemed two years after purchase, a three-month interest penalty will be applied (TF)

True

If a smart card is stolen, the thief cannot access your bank account (TF)

True

What should you do if you make an error while writing a check

Write void in it and mark it down in your register

Many people rent a ____ which is a secure container locate in a bank vault, to store important documents and valuable jewelry

safe deposit box

Which of the following is the most liquid (savings account, money market account, certificate of deposit, savings bond)

savings account