Future Business Leaders of America (FBLA) Accounting Practice Test

What characterizes a dishonored check?

1. A check that has been signed incorrectly

2. A check the bank refuses to pay

3. A check with insufficient funds

4. A check used for electronic payments

The correct answer is: A check the bank refuses to pay

A dishonored check is characterized by the bank's refusal to pay it, which is the correct answer. When a check is presented to the bank for payment, a dishonor can occur for various reasons, including issues with the account, insufficient funds, or the account being closed. The essential characteristic is that the bank does not honor the check as valid payment, leading to the payee not receiving the funds. In the context of this question, it's important to understand the nuances of the other options. A check signed incorrectly could lead to a bank refusing payment, but it does not encompass all reasons for a check being dishonored. Similarly, while a check with insufficient funds is a common reason for dishonor, it is just one scenario and doesn't fully define what a dishonored check is. The option regarding electronic payments is not pertinent; dishonored checks specifically relate to traditional paper checks, and electronic payments are a different form of transaction entirely.