Asked by Matthew Valenzuela on Jul 06, 2024
Verified
Which of the following is the best definition of zero-balance account?
A) The costs associated with holding too little cash.
B) An automated teller machine card used at the point of purchase to avoid the use of cash. As this is not a credit card, money must be available in the user's bank account.
C) A chequing account in which a zero balance is maintained by transfers of funds from a master account in an amount only large enough to cover cheques presented.
D) The need to hold cash to satisfy normal disbursement and collection activities associated with a firm's ongoing operations
E) A firm's desired cash level as determined by the trade-off between carrying costs and shortage costs.
Zero-Balance Account
A bank account maintained with a balance of zero, where funds are transferred to cover checks presented for payment.
Chequing Account
A bank account from which money can be withdrawn without notice, usually through the issuance of checks.
Master Account
An overarching account that has the authority and capability to control other accounts within a financial or investment framework.
- Characterize fundamental phrases related to the management of cash, including target cash balance, zero-balance account, and the transaction purpose.
Verified Answer
YR
Yulissa RodriguezJul 12, 2024
Final Answer :
C
Explanation :
A zero-balance account is specifically designed to maintain a zero balance by automatically transferring funds from a master account to cover checks or debits presented, ensuring efficient cash management without maintaining a separate balance in the account itself.
Learning Objectives
- Characterize fundamental phrases related to the management of cash, including target cash balance, zero-balance account, and the transaction purpose.