A zero balance account:A) Is used to cover the compensating balance requirement of a line of credit agreement.B) Is only used to deposit funds received at local lockboxes.C) Is funded on an as-needed basis only.D) Is limited to handling payroll disbursements.E) Requires a compensating balance.

Question

A zero balance account:A)  Is used to cover the compensating balance requirement of a line of credit agreement.B)  Is only used to deposit funds received at local lockboxes.C)  Is funded on an as-needed basis only.D)  Is limited to handling payroll disbursements.E)  Requires a compensating balance.

Dideoluwa Sotubo · Accepted Answer

Final Answer : C, Explanation :  A zero balance account is funded as needed, meaning it maintains a zero balance until funds are required for specific transactions or disbursements, at which point the exact amount needed is transferred into the account.

A zero balance account:

A) Is used to cover the compensating balance requirement of a line of credit agreement.
B) Is only used to deposit funds received at local lockboxes.
C) Is funded on an as-needed basis only.
D) Is limited to handling payroll disbursements.
E) Requires a compensating balance.

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