A Depositor Issued a Check And, After Mailing the Check

question 28

Multiple Choice

A depositor issued a check and, after mailing the check, suffered a heart attack and died. In the regular course of business, the bank paid the check when presented for payment, despite the fact that the bank had received notice fourteen (14) days earlier of the depositor's death. In terms of the bank's payment of the check

• A) the bank is liable if the check was a gift to charity.
• B) the bank is potentially liable to the depositor's estate.
• C) the bank is not liable unless the depositor's executor posted an indemnity bond.
• D) the bank's authority to act for the depositor ended on the depositor's death, regardless of whether the bank had been notified of the depositor's death.

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Definitions:

Price Variances

The difference between the actual cost and the standard cost of goods or services.

Direct Labor Cost Variance

The difference between the budgeted or expected cost of direct labor and the actual cost incurred.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels of the business.

Unfavorable Variance

A financial term describing a situation where actual costs exceed budgeted or planned costs.