What Is the Effect of a Payor Bank's Dishonor of a Check

question 24

Multiple Choice

What is the effect of a payor bank's dishonor of a check?

• A) The provisional credits must be reversed.
• B) It returns the check.
• C) The customer who deposited the item for collection must cover the item and seek recovery from the drawer or indorsers.
• D) All of these will occur.

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Definitions:

Zero Economic Profit

A situation where a firm's total revenues exactly equal its total costs, indicating no above-normal profit.

Economist

A professional or expert in economics, studying the production, distribution, and consumption of goods and services.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment’s cost.

Price-taker Market

A market situation where buyers and sellers accept the prevailing market price as they individually have no influence over it.