Which of the following best describes the availability float?
A) how long it takes the firm to process the check and deposit it in the bank
B) how long it takes before the bank gives the firm credit for the funds
C) how long it takes before payments to suppliers actually result in a cash outflow for the firm
D) how long it takes for a firm to be able to use funds after a customer has paid for its goods

Question

Quizplus · Accepted Answer

Availability float refers to the time between when a check is deposited and when the bank gives the firm credit for the funds. This period is often used by firms to maximize their cash balances and earn interest on those funds before they are required to be used. Option A describes processing float, option C describes payment float, and option D describes collection float.

Which of the Following Best Describes the Availability Float