Asked by Yasmin Neves on Apr 24, 2024
Verified
Adrian writes Mauldin a $500 check for the work that he performed on Adrian's computer. Adrian and Mauldin have accounts at the same bank. In this situation, since Adrian and Mauldin's accounts are at the same bank, the bank will issue a(n) ________ credit to the Mauldin's account, and, if the bank does not dishonor the check, the credit will become an actual payment.
A) temporary
B) potential
C) optional
D) provisional
E) Interim
Provisional Credit
Temporary credit issued by a bank to an account holder, often while disputes or errors are being resolved.
Dishonor
In finance, the refusal or inability of a drawee of a negotiable instrument to pay the amount due upon presentment.
Actual Payment
The real transfer of funds from one party to another, completing a transaction or settling a debt.
- Explain the concept of provisional credit and the conditions under which it becomes actual payment.
Verified Answer
TS
taina santiago7 days ago
Final Answer :
D
Explanation :
The correct term is "provisional" credit, which means the bank credits Mauldin's account with the amount of the check, but this credit is conditional upon the check not being returned or dishonored. If the check is valid, the provisional credit becomes permanent, turning into actual payment.
Learning Objectives
- Explain the concept of provisional credit and the conditions under which it becomes actual payment.