Asked by Jacob Searcy on Jul 27, 2024
Verified
Which of the following is the best definition of lockboxes?
A) The need to hold cash to take advantage of additional investment opportunities, such as bargain purchases.
B) Much like an automated teller machine card; one use is within corporations to control access to information by employees
C) Bank makes proceeds of cheques deposited available the same day before cheques clear.
D) The need to hold cash as a safety margin to act as a financial reserve.
E) Special post office boxes set up to intercept and speed up accounts receivable payments.
Lockboxes
Special post office boxes set up to intercept and speed up accounts receivable payments.
Accounts Receivable
The sum of money that customers owe to a company for products or services that have been provided but not yet compensated for.
Speed Up Payments
Actions or policies implemented to reduce the time it takes to receive payments from customers, thereby improving cash flow.
- Master the concepts and benefits of employing concentration accounts, lockboxes, and zero-balance accounts for effective cash management.
Verified Answer
AL
Amber LynetteJul 27, 2024
Final Answer :
E
Explanation :
Lockboxes are special post office boxes used by companies to speed up the collection of accounts receivable payments. The payments are sent to a post office box instead of the company's address, allowing the bank to process the payments directly and quickly.
Learning Objectives
- Master the concepts and benefits of employing concentration accounts, lockboxes, and zero-balance accounts for effective cash management.