Chapter 4 Terms Flashcards
(1) money in the form of bills or coins (2) money on hand or in the bank
Cash
Currency or other financial instrument used to facilitate transactions between parties
Medium of Exchange
a security technique that uses two or more individual parties operating together to protect sensitive functions, information, or assets. Both are equally responsibly for physically protecting materials in vulnerable transactions. Neither party may access or use the materials independently. Also known as dual control.
Dual Custody
a draft on an account in a bank that the owner of the account signs to direct the bank to pay a certain amount to the payee
Check
A set of laws adopted by states to govern commercial and financial transactions between parties. Many states add their own amendments to the basic code.
Uniform Commercial Code
An unconditional written order or promise to pay a certain sum of money. The document must be easily transferable from one party to another by endorsement and delivery or delivery alone.
Financial Instrument
A signature (other than the signature of the maker, drawer, or acceptor) typically made on the bank of the instrument, such as a check, for negotiating the instrument, restricting payment, or transferring liability of the instrument to another party.
Endorsement
A public officer who acknowledges or otherwise attests or certifies documents as authentic, usually under an official seal.
Notary Public
A paper reproduction of the original check drawn from an electronic file that contains an image of the front and back. It bears the full MICS line as allowed by industry standards for such checks, conforms in paper stock and dimensions to the standards, and can be processed through automated check systems.
Substitute Check
The process of removing the physical paper check from the processing flow.
Truncation
The bank in which a check is first deposited. The bank also may be the drawee if the check is drawn on, payable at, or payable through the bank.
Depository Bank
A person who is in possession of a negotiable instrument and who is entitled to receive payment of the instrument.
Holder
A check deposited or otherwise negotiated at the bank on which it is drawn.
On-Us Check
One who holds a negotiable instrument, such as a check, and who takes the instrument: for value, in good faith, without notice that it is overdue or dishonored, without knowledge that it has unauthorized signature or is altered, without knowledge of claims to instrument, without knowledge of defense against payment.
Holder In Due Course
an order by a depositor to the bank (the drawee) to not pay a preciously issued check or item.
Stop Payment
Failure of the drawee to pay a properly payable check
Wrongful Dishonor
Giving cash in exchange for on-us check
Paying a Check
Giving cash for a check drawn on another bank
Cashing a Check
An interbank electronic or paper transmittal form, resembling a deposit slip, used to accompany cash items sent from one bank to another
Cash Letter
An expression indicating that a check or item drawn against an account exceeds the amount of funds available in the account. Commonly called an “NSF” or overdraft
Nonsufficient Funds
A restriction on the payment of all or any part of the balance in an account
Hold
A check on which a material change, such as the dollar amount, has been made
Altered Check
A bank service that pays a business’s checks only if they match the check data on an electronic list of issued checks that the business sends to the bank.
Positive Pay
