"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 check and clearing it through the banking system.
D) a customer writes "hot" checks.

Question

Quizplus · Accepted Answer

"Float" occurs due to the lag between writing a check and clearing it through the banking system. This creates a temporary difference in the firm's cash balance on their own books and their actual cash balance in the bank, which is known as "float".

"Float" Takes Place Because