Asked by Nathalie Almonte on Jul 08, 2024
Verified
Which of the following is the best definition of float?
A) The difference between book cash and bank cash, representing the net effect of cheques in the process of clearing.
B) A strategy in which an investor purchases securities to own them on the day of record and then quickly sells them; designed to attain dividends but avoid the risk of a lengthy hold.
C) Bank makes proceeds of cheques deposited available the same day before cheques clear.
D) The need to hold cash as a safety margin to act as a financial reserve.
E) Special post office boxes set up to intercept and speed up accounts receivable payments.
Book Cash
The amount of cash on hand as recorded in the financial records of a company.
Bank Cash
Bank Cash refers to the liquid assets held by a financial institution that is readily available for transactions and immediate withdrawal.
Cheques
A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or to a specified person, out of the drawer's bank account.
- Identify and explain the concepts of float in cash management.
Verified Answer
MA
Mohamad ali El haririJul 09, 2024
Final Answer :
A
Explanation :
Float refers to the time difference between when an individual writes a check and when the bank clears that check, causing a discrepancy between the bank balance and the balance in the individual's checkbook.
Learning Objectives
- Identify and explain the concepts of float in cash management.