In a Lock-Box System ________

question 139

Multiple Choice

In a lock-box system ________.

• A) customers send their checks directly to a post office box that belongs to the company
• B) there is a delay in getting the cash into the company's bank account
• C) a bank employee empties the box daily and records the deposits into the company's bank account
• D) a bank employee records the journal entry

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Definitions:

Depository Institutions

Financial institutions that accept deposits from individuals and provide loans, such as banks and credit unions.

Loans

Sums of money borrowed that are expected to be paid back with interest by the borrower over a specified period of time.

Discount Rate

The interest rate charged by central banks on loans they give to commercial banks and other financial institutions.

Fed

The Federal Reserve System, which is the central banking system of the United States, responsible for monetary policy.