Asked by Jacob Lovins on Jul 15, 2024
Verified
Disbursement float is sometimes used by firms to fund short-term investments even though such use is ethically questionable.
Disbursement Float
The time gap between the writing of a check and the reduction of the payer's bank account balance.
Short-term Investments
Assets that can easily be converted into cash, typically within 5 years or less.
Ethically Questionable
Pertains to actions or decisions that raise concerns regarding their morality or adherence to accepted ethical standards.
- Acquire knowledge about the concept of disbursement and collection float and their effects on a company's management of cash.
Verified Answer
AS
Alexandria SchererJul 21, 2024
Final Answer :
True
Explanation :
Disbursement float refers to the time lag between when a check is issued by a firm and when the funds are actually withdrawn from the firm's bank account. During this period, firms might use the funds that have not yet been deducted for short-term investments, which can be seen as ethically questionable because it involves using funds that are technically no longer the firm's to use.
Learning Objectives
- Acquire knowledge about the concept of disbursement and collection float and their effects on a company's management of cash.
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