Asked by Austin Vaughn on Jul 07, 2024
Verified
Collection time:
A) Is equal to mail time plus the processing delay minus the availability delay.
B) Increases when payments are made electronically.
C) Increases when customers' bills are sent electronically.
D) Is decreased when customers pay at the point of sale rather than when they are billed.
E) Is independent of the business nature of a firm.
Collection Time
The average period that a company takes to collect payments from its customers after a sale has been made, impacting cash flow and liquidity.
Processing Delay
The time lag between the initiation and completion of a process, often seen in transaction processing or manufacturing operations.
Availability Delay
The lag between the deposit of a check and the moment the funds become available in the account.
- Attain a solid understanding of the theories and importance of collection and disbursement float in managing cash.
- Gain insight into methods for decreasing collection float and the significance of electronic payments in controlling float.
Verified Answer
Learning Objectives
- Attain a solid understanding of the theories and importance of collection and disbursement float in managing cash.
- Gain insight into methods for decreasing collection float and the significance of electronic payments in controlling float.
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