Zachary, Who Has Been Authorized to Write a Check from a Company

question 37

Multiple Choice

Zachary, who has been authorized to write a check from a company account to pay employees, draws bonus checks from the company account for five fictitious employees, endorses the checks in their names, and deposits those into his own bank account. Which of the following is true regarding whether the company will be required to take the loss on the checks?

• A) Under the fictitious payee rule, the company will be required to take the loss on the checks unless the company can obtain the funds from Zachary.
• B) Under the imposter rule, the company will be required to take the loss on the checks unless the company can obtain the funds from Zachary.
• C) Under the transferor rule, the company will be required to take the loss on the checks unless the company can obtain the funds from Zachary.
• D) Under the employee-liability rule, in addition to its rights in regard to Zachary, the company will be able to recover from any bank that cashed the checks.
• E) Under the banking liability act, in addition to its rights in regard to Zachary, the company will be able to recover from any bank that cashed the checks.

---

Definitions:

Utility Function

A mathematical representation of how consumers rank different bundles or combinations of goods and services according to the level of satisfaction or utility those combinations provide.

Paasche Price Index

An economic measure that calculates the change in the cost of acquiring a given basket of goods and services in the current period compared to a base period, using the current period quantities as weights.

Doggerel

A term used to describe poetry that is irregular in rhythm, rhyme, or is of a trivial or low quality.

WARP

Stands for the Weak Axiom of Revealed Preference, a criterion used in consumer choice theory to assess whether observed choices are consistent with rational behavior.