Which of the Following Statements Regarding Check 21 Is False

question 64

Multiple Choice

Which of the following statements regarding Check 21 is false?

• A) It allows banks to exchange checks electronically.
• B) Before this system, paper checks were flown around the country from bank-to-bank to complete the check-clearing process.
• C) It requires that banks exchange check images.
• D) It significantly reduced float.

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Definitions:

Factoring Receivables

A financial transaction where a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.

Allowance for Doubtful Accounts

A contra asset account on a company’s balance sheet that represents the amount of receivables it does not expect to collect.

Credit Sales

Sales transactions where the customer is allowed to pay at a later date, typically generating accounts receivable.

Bad Debt Expense

Represents the expense associated with accounts receivable that a company does not expect to collect.