Which of the Following Is the Best Definition of Float

question 274

Multiple Choice

Which of the following is the best definition of float?

• A) The difference between book cash and bank cash, representing the net effect of cheques in the process of clearing.
• B) A strategy in which an investor purchases securities to own them on the day of record and then quickly sells them; designed to attain dividends but avoid the risk of a lengthy hold.
• 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.

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Definitions:

Passive Activity

Economic endeavors in which a person is not actively involved on a regular, continuous, or substantial basis, often related to investment income.

Passive Losses

Financial losses occurring from income-generating activities in which the taxpayer does not materially participate, often subject to specific tax rules.

At-Risk Rules

Tax regulations that limit the amount of deductible losses from certain types of investments to the amount the taxpayer has at risk.

Passive Activity Losses

Financial losses in activities in which the taxpayer does not materially participate, with limitations on their use to offset other income.