"Float" takes place because:
A) a firm is early in paying its bills.
B) the level of cash on the firm's books is equal to the level of cash in the bank.
C) a lag exists between writing a cheque and it being debited to the bank account.
D) a customer writes "hot" cheques.

Question

Quizplus · Accepted Answer

"Float" occurs because there is a time delay between writing a check and it being debited from the bank account. This time delay creates a window of opportunity for funds to appear as available in both the company's checking account and the recipient's account.

"Float" Takes Place Because