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Chapter 23:  Banking & Credit

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

 1. 
The four major types of financial institutions offer similar services.
 

 2. 
A credit union has no restrictions on who may use its financial services.
 

 3. 
A canceled check is legal proof of payment.
 

 4. 
If there is ever a difference between the numerical amount and the written amount of a check, the numerical amount is the legal one.
 

 5. 
It is legal to write a check to yourself and cash it.
 

 6. 
Endorse a check exactly as it is made out, even if your name is written incorrectly.
 

 7. 
Automated teller machines (ATM) require your personal identification number (PIN).
 

 8. 
Buyers generally pay back sales credit in equal installments over a fixed time period.
 

 9. 
The law requires lenders to tell you in writing before you sign an agreement what the cost of credit will be.
 

 10. 
The percentage cost of credit on a yearly basis is called the annual percentage rate.
 

Matching
 
 
Match each item to the correct statement listed below.
a.
Automated teller machine
b.
Telephone banking system
c.
Computer banking system
d.
Direct deposit/withdrawal
e.
Point-of-sale transfer
 

 11. 

 Transactions conducted via voice mail menus and Touch Tone.
 

 12. 

 Use a debit card to make a purchase
 

 13. 

 Manage your bank account online
 

 14. 

 24-hour electronic terminal
 

 15. 

 Paycheck automatically deposited and regular bills paid
 

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

 16. 
Which type of financial institution is known as a “full-service bank”?
a.
mutual savings bank
b.
savings and loan association
c.
credit union
d.
commercial bank
 

 17. 
The majority of home mortgages are provided by
a.
mutual savings banks.
b.
savings and loan associations.
c.
credit unions.
d.
commercial banks.
 

 18. 
A type of checking account offered by credit unions is called a
a.
minimum balance account.
b.
cost-per-check account.
c.
share draft account.
d.
NOW account.
 

 19. 
Writing a check for more than you have in an account is called a(n)
a.
overdraft.
b.
postdated check.
c.
debit.
d.
credit.
 

 20. 
The person or company to whom you write a check is the
a.
payee.
b.
debtor.
c.
endorsee.
d.
creditor.
 

 21. 
The correct way to write the numerical amount of a check for 95 cents is
a.
$.95.
b.
0.95 cents.
c.
ninety-five cents.
d.
only 95 cents.
 

 22. 
One of the most common mistakes in maintaining a checking account is
a.
writing a check for the wrong amount.
b.
writing a postdated check.
c.
not recording checks in the register.
d.
bouncing a check.
 

 23. 
All of the following are good check writing guidelines, EXCEPT
a.
use a pen to write a check.
b.
VOID any check on which you have made an error.
c.
don’t give a signed blank check to someone.
d.
postdate all checks to prevent overdrafts.
 

 24. 
The process of “balancing a checkbook” each month is known as
a.
authenticating.
b.
endorsing.
c.
reconciling.
d.
registering.
 

 25. 
If you are going to borrow money to buy a car, you will probably obtain
a.
sales credit.
b.
loan credit.
c.
finance credit.
d.
installment credit.
 

 26. 
The most common form of consumer sales credit such as VISA and MasterCard is a(n)
a.
open charge account.
b.
closed charge account.
c.
revolving charge account.
d.
installment account.
 

 27. 
A monthly statement of account includes information on all of the following transactions, EXCEPT
a.
service charges.
b.
canceled checks.
c.
deposits.
d.
endorsed checks.
 

 28. 
The total dollar amount you pay for using credit is called the
a.
interest charge.
b.
finance charge.
c.
installment charge.
d.
annual percentage rate.
 

Short Answer
 

 29. 
How does electronic banking change money management?
 

 30. 
Explain the two main advantages of checking accounts versus cash.
 



 
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