Asked by carson Southwell on Jul 15, 2024
Verified
The period of time between the issuance of a cheque by a firm and the deduction of the amount of the cheque from the firm's bank account creates the:
A) Processing delay.
B) Disbursement float.
C) Availability delay.
D) Collection float.
E) Lockbox period.
Disbursement Float
The time delay between when a check is issued and when it is deducted from the payer's bank account.
Issuance
The process of offering new or existing securities for sale to investors by a corporation or government entity.
Bank Account
A financial account maintained by a bank or other financial institution where the funds deposited by an account holder can be accessed.
- Acknowledge the strategic value of controlling collection and disbursement floats in the domain of cash management.
Verified Answer
GB
Gagandeep BhanguJul 18, 2024
Final Answer :
B
Explanation :
The disbursement float refers to the time gap between when a cheque is issued by a firm and when the amount is actually deducted from the firm's bank account. This period allows the firm's account to show a higher balance than is actually available for use, due to the processing time required for the cheque to clear.
Learning Objectives
- Acknowledge the strategic value of controlling collection and disbursement floats in the domain of cash management.