Asked by Bhushan Chaudhari on Jul 07, 2024
Verified
Your company has an available balance of $5,980. A deposit of $1,470 that was made this morning is not yet included in the bank's balance. There are also 2 checks outstanding with a value of $495 each. What is the net float?
A) Net collection float of $480.
B) Net collection float of $975.
C) Net float of $900.
D) Net disbursement float of $480.
E) Net disbursement float of $975.
Net Float
Net float refers to the difference between checks written against and deposited in an account, impacting the available balance before all transactions are settled.
- Assess the net float and its impact on a firm’s cash management.
Verified Answer
RE
Ronjhae EmeryJul 14, 2024
Final Answer :
A
Explanation :
The net float is calculated by subtracting the total of outstanding checks from the deposits in transit. Here, the deposit in transit is $1,470 and the total of outstanding checks is $990 ($495 x 2). Therefore, the net float is $480 ($1,470 - $990), which is a net collection float because the deposits in transit exceed the outstanding checks.
Learning Objectives
- Assess the net float and its impact on a firm’s cash management.