A disbursement account for which the firm maintains no balance, transferring in funds from a master account only when needed to cover demands for payment, is called a _____ account.

A) lockbox
B) cleanup
C) compensating balance
D) zero-balance
E) revolving

Zero-Balance Account

A bank account in which the balance is maintained at zero by automatically transferring funds from a master account.

Compensating Balance

A compensating balance is a minimum balance that must be maintained in a bank account, required by some banks in order for their customers to obtain or maintain a loan.

Master Account

A central account that holds funds or securities, often used by institutions to manage multiple sub-accounts.