Asked by Michel Belcher on Oct 01, 2024
Which of the following is true of the drawer-drawee relationship?
A) The drawer becomes the creditor when the drawee bank pays more than the drawer has on deposit.
B) The drawer becomes a debtor and the drawee bank becomes the creditor at the time of opening a checking account.
C) The drawer becomes the insured and the drawee bank becomes the insurer at the time of opening a checking account.
D) The drawer becomes the creditor and the drawee bank becomes the debtor at the time of opening an account.
Drawer-Drawee Relationship
The financial interaction where the drawer writes a check and the drawee bank or financial institution pays the amount.
Checking Account
A bank account that allows for easy access to funds through checks and electronic means for everyday transactions.
Creditor
An entity or person that lends money or extends credit to another party, expecting repayment in the future.
- Familiarize yourself with the liabilities and roles of banks concerning bounced checks, checks written with a future date, and orders to cease payment.
- Understand the relationship between the drawer, drawee, and payee in the context of check transactions.
Learning Objectives
- Familiarize yourself with the liabilities and roles of banks concerning bounced checks, checks written with a future date, and orders to cease payment.
- Understand the relationship between the drawer, drawee, and payee in the context of check transactions.