Reference - Check Cashing Business

question 60

Multiple Choice

Reference - Check Cashing Business. Susan owns and operates a check cashing business. A customer, Bob, claiming to be Sam, comes in and cashes a $2,000 check issued by ABC Trucking to Sam. The day after Susan cashed the check, she received a notice from ABC Trucking that some checks had been stolen. It was later discovered that the customer had forged Sam's name on the check issued by ABC Trucking. At the time she took the ABC Trucking check, Susan was very busy with several customers in line. She simply glanced at the check and cashed it. A reasonable examination would have revealed that the check had been materially altered and changed from the amount of $200 to $2,000. Susan decided that she needed to hire some people to help her because she also had a problem with another check. On the same day that she took the ABC Trucking check, she took a check from another customer, Maurice. It was later discovered that the check from Maurice, which was four months old, was the subject of a dispute between Maurice and the issuer of the check for whom Maurice had done some work. The issuer claimed that the work was improperly done. Both ABC Trucking and the issuer of the check to Maurice stopped payment on the checks. Susan claims that she was entitled to the status of holder in due course and was entitled to payment on both checks. What is the effect on Susan's status as a holder in due course in taking the check from the customer that was four months old?

• A) There is no effect on her status as a holder in due course because an instrument is only considered overdue if it is outstanding for 150 days.
• B) There is no effect on her status as a holder in due course because an instrument is only considered overdue if it is outstanding for 180 days.
• C) There is no effect on her status as a holder in due course because an instrument is only considered overdue if it is outstanding for one year.
• D) She would not be considered a holder in due course because a check is considered overdue 90 days after its date.
• E) It has no effect because a check is never considered overdue.

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Definitions:

Units Sold

The quantity of an item sold by a company in a specific period.

Hard Rationing

A situation where companies cannot obtain funds for investment, even if they are willing to pay higher interest rates, due to external factors.

Net Present Value

A calculation that determines the current value of a series of future cash flows, discounted back to their present value at a specific discount rate.

Funding Requests

Applications or appeals for financial support, typically made by businesses or organizations to potential investors or grant bodies.