First Bank Has Determined That 2:00 P

question 28

Multiple Choice

First Bank has determined that 2:00 p.m. is the cutoff hour for handling checks, and that all checks received after this deadline will be posted to the customer's account the following day. Ronald, an attorney, is irate about the bank's policy and tells the clerk that its policy violates the UCC. Is he correct?

• A) Yes, the UCC does not allow banks to establish cutoff hours for handling checks.
• B) Yes, although the UCC allows banks to establish cutoff hours for handling checks, the earliest a bank may require for such a policy is 4:00 p.m.
• C) No, the UCC allows banks to establish cutoff hours for making entries on their books.
• D) No, the UCC specifically states that all banks must establish a 2:00 p.m. cutoff hour for handling checks.
• E) No, the UCC is silent regard cutoff hours for banks.

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Definitions:

Ending Inventory

The total value of all inventory a company has in its possession at the end of a reporting period, vital for calculating cost of goods sold.

Cost Flow Assumption

An accounting method used to value inventory and determine the cost of goods sold, based on the assumed flow of goods.

Moving Average Method

The Moving Average Method is an inventory costing method that calculates the average cost of inventory by taking the average of the costs of goods available for sale.

Inventory Transaction

This term refers to any event that causes a change in the quantity or value of inventory held by a business.