Which of the Following Statements Concerning Zero Balance Accounts Is

question 31

Multiple Choice

Which of the following statements concerning zero balance accounts is not correct?

• A) They are set up to handle disbursement activity.
• B) The account has a minimum amount at all times.
• C) Checks are automatically transferred into the account as checks are presented for payment.
• D) The transfer is automatic and involves an accounting entry only.
• E) The master and the zero balance accounts are located at the same bank.

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Definitions:

Asset Turnover

A financial metric assessing how well a company utilizes its assets to produce sales income.

Working Capital

A measure of a company’s liquidity; computed as current assets minus current liabilities.

Note Payable

A written agreement in which one party agrees to pay another party a definite sum of money at a future date or on demand.

Current Assets

Assets likely to be converted into cash, sold, or consumed within a year or the normal operating cycle of the business.