Chapter 7

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

____ 1. Banks work to earn a profit by selling financial services.

____ 2. When you receive a check, you must deposit all of it in your own checking account.
____ 3. A popular way to transfer money electronically is through an automated teller machine.
____ 4. It is wise to give your PIN number to a few close friends.
____ 5. Banks usually send you reports of your checking account activity each month.
____ 6. You should reconcile your bank account about once every six months.
____ 7. A certified check guarantees that your account can cover the check.
____ 8. It is good policy to record a checking transaction as soon as you can find the time.
____ 9. The difference in the interest charged by banks on loans and the interest paid on money deposited is the bank's
income.
____ 10. Checks provide safety, convenience, and written records of transactions.

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

____ 11. The FDIC insures bank deposits in most banks up to a maximum of ____.
a. $75,000
b. $100,000
c. $200,000
d. $250,000
____ 12. Trading goods and services without using money is ____.
a. borrowing
b. bartering
c. depositing
d. lending
____ 13. The option of having paychecks deposited into an account by an employer is called a ____.
a. withheld deposit
b. salary deposit
c. direct deposit
d. personal deposit
____ 14. Having the bank deduct a certain amount from your checking account each month to pay a bill is a(n) ____.
a. automatic withdrawal
b. scheduled register
c. monthly fee
d. timed transfer
____ 15. A bank's own personal check signed by a bank employee is a ____.
a. money order
b. cashier's check
c. traveler's check
 d. certified check
____ 16. The book in which a person keeps a record of the checks he or she has written and the deposits made is called
a ____.
a. folder
b. check register
c. balance book
d. data file
____ 17. Which of the following are checks for which you pay in advance and, if they are lost or stolen, the company
from which you bought these checks will replace them?
a. canceled checks
b. outstanding checks
c. traveler's checks
d. negotiable checks
____ 18. An electronic communication that moves money from an account in one bank to an account in a different
bank is a(n) ____.
a. safe funds transfer (SFT)
b. electronic funds transfer (EFT)
c. legal funds transfer (LFT)
d. available funds transfer (AFT)
____ 19. Banks provide a place for you to keep your noncash items, also known as a ____.
a. checkbook
b. savings account
c. safe deposit box
d. security vault
____ 20. On money loaned, banks charge ____.
a. more interest than what they pay on amounts in savings accounts
b. less interest than what they pay on amounts in savings accounts
c. the same interest than what they pay on savings accounts
d. a rate of interest set by the government
____ 21. Kirk recently opened a checking account with a local bank. The first check he wrote was to BestBi Food Mart
for groceries and miscellaneous items in the amount of $43.75. Since BestBi is the business to which Kirk
wrote the check, BestBi is considered to be the ____.
a. payer
b. drawer
c. payee
d. drawee
____ 22. Francesca opened a checking account at First Bank one month ago. During the month she wrote 25 checks.
First Bank will charge her $.25 per check. This fee per check is known as a ____.
a. service charge
b. maintenance charge
c. transfer charge
d. debit charge
____ 23. Next Wednesday Tracy and Jon will close on the home they are buying. At the closing, they will sign several
legal documents and provide the mortgage company with a $15,000 down payment. Tracy and Jon do not
want to carry that much cash with them; the mortgage company will not accept their personal check for that
large a sum of money. What can they obtain in advance to make the $15,000 down payment?
a. a certified check
b. a traveler's check
c. a money order
 d. a federal reserve note
____ 24. Muong is about to graduate from high school. He plans to attend community college in the fall. To help him
with some of his expenses, many of his relatives are giving him cash as a graduation present. His great aunt,
however, gave him a check for $200. Since Muong does not have a checking account he will give the check to
his mother, Fay, to cash. On the back of the check, he signs his name; immediately under his signature he
writes, "Pay to the order of Fay Nguyen." This type of check is known as a ____.
a. transfer check
b. third-party check
c. cleared check
d. certified check
____ 25. Today is Yolanda's payday. She has decided to deposit her entire paycheck into her checking account. After
she endorses the check, what will she need to give the bank to complete this transaction?
a. a completed deposit slip
b. her social security number
c. her drivers license
d. her PIN
____ 26. Stuart’s economics teacher asked him to research the advantages of using a checking account to pay bills in-
stead of using cash. Which of the following is not an advantage?
a. checking accounts provide security for deposited money
b. there are no costs associated with using checking accounts
c. checking accounts provide a record of their transactions
d. only the person you write a check to can legally cash that check
 Chapter 7
Answer Section

TRUE/FALSE

1. ANS: T
2. ANS: F
3. ANS: T
4. ANS: F
5. ANS: T
6. ANS: F
7. ANS: T
8. ANS: F
9. ANS: T
10. ANS: T

MULTIPLE CHOICE

11. ANS: C
12. ANS: B
13. ANS: C
14. ANS: A
15. ANS: B
16. ANS: B
17. ANS: C
18. ANS: B
19. ANS: C
20. ANS: A
21. ANS: C
22. ANS: A
23. ANS: A
24. ANS: B
25. ANS: A
26. ANS: B