Fact Pattern 28-2B (Questions B16-B18 Apply)

question 18

Multiple Choice

Fact Pattern 28-2B (Questions B16-B18 apply)
Belle draws a check on her account in Capital Credit Bank in New York, payable to Distribution Marketing, Inc., in San Francisco. Distribution Marketing deposits the check in its ac?count at Equity Bank. Equity Bank deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank sends the check to Capital Credit.
-Refer to Fact Pattern 28-2B. Central City, Distribution Marketing's bank, is

• A) the cashing bank.
• B) the depositary bank.
• C) the intermediary bank.
• D) the payor bank.

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Definitions:

Effective Tax Rate

The average rate at which an individual or corporation is taxed, considering all forms of taxes.

Investment Account

An account held at a financial institution that holds investments such as stocks, bonds, mutual funds, and other assets for the benefit of the investor.

Intercompany Profit

Profits that arise from transactions between companies within the same corporate group, which could distort the true financial position if not eliminated in consolidated financial statements.

Gross Margin

A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage.