If a Bank Pays a Check After It Is Given

question 43

Multiple Choice

If a bank pays a check after it is given a stop-payment order and has to reimburse its customer for the improperly paid check, _____.

• A) it acquires all the rights of its customer against the person to whom it originally made payment
• B) it will not acquire the rights arising from the transaction on which the check was based
• C) it acquires partial rights of its customer against the person to whom it originally made payment
• D) the customer to whom payment was made will retain all the rights

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Definitions:

Acid-Test Ratio

A financial metric used to determine a company's short-term liquidity by comparing its most liquid assets (excluding inventory) against its short-term liabilities.

Just-In-Time Inventory System

A supply chain management strategy aimed at reducing inventory costs by receiving goods only as they are needed in the production process.

Acid-Test

A liquidity ratio that measures a company's ability to pay off its current liabilities with quick assets without relying on the sale of inventory.

Current Ratio

A financial ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.