Question

The practice of "kiting" as a means of overstating cash is possible only if the client maintains two or more bank accounts.

1) True
2) False

Answer 1

The practice of "kiting" as a means of overstating cash is possible only if the client maintains two or more bank accounts.

Step-by-step explanation:

The statement is true. The practice of "kiting" as a means of overstating cash is possible only if the client maintains two or more bank accounts. Kiting involves writing a check from one account and depositing it into another account to create the appearance of funds in the receiving account, even though the funds do not actually exist.

For example, if a client writes a check for $1,000 from Bank Account A and deposits it into Bank Account B, Bank B would count that $1,000 as available funds, even though the check from Bank Account A may not clear for a few days. This temporary inflation of account balances is considered fraudulent and is a form of check fraud.

By maintaining multiple bank accounts, a person can engage in kiting by continuously writing checks between the accounts to artificially inflate their cash position and give the appearance of having more funds than they actually do.