When a Drawee Bank Is Presented with a Check Drawn

question 50

Multiple Choice

When a drawee bank is presented with a check drawn on a customer's account in which there are not sufficient funds to pay the check,the bank:

• A) must pay the check if the customer is an established customer.
• B) is not permitted to pay the check.
• C) must notify the drawer before deciding whether or not to pay the check.
• D) may choose whether to pay the check, but cannot charge interest on the overdraft unless the customer previously agreed to the payment of overdraft interest.
• E) may choose whether to pay the check, and can charge interest on the overdraft in all circumstances.

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Definitions:

Factory Overhead Rate

Factory overhead rate is the method of allocating indirect manufacturing costs, like utilities and rent, to individual units of production based on a specific allocation base.

Assembly Department

a division within a manufacturing plant where components are put together to create a final product.

Direct Labor Hour

The amount of time employees directly involved in manufacturing spend on producing a specific unit of output.

Factory Overhead Rates

Calculated rates used to allocate a factory's indirect costs to products being produced, aiding in determining total production costs.