Asked by Jordan Novak on Jul 23, 2024
Verified
Due to a flood in the Canadian prairies, cheques received by firms in the affected area are not deposited for several days. This represents an increase in the ____________ float for the depositing firm.
A) Ledger.
B) Clearing.
C) Net.
D) Collection.
E) Disbursement.
Collection Float
The time period between when a payment is initiated by a payer and when the funds are available in the payee’s account.
- Understand the concept of float in cash management and its implications.
Verified Answer
NV
Naresh VeeravalliJul 26, 2024
Final Answer :
D
Explanation :
This scenario represents an increase in the collection float, which is the time between when a cheque is received by a firm and when the funds are available in the firm's account. The delay in depositing cheques due to the flood increases the collection float.
Learning Objectives
- Understand the concept of float in cash management and its implications.