Which Statement Best Describes Float

question 90

Multiple Choice

Which statement best describes float?

• A)A lack of synchronization of cash inflows and outflows will result in larger cash balances than would be necessary with better synchronization, but the cash balances can be reduced by increasing disbursement float and decreasing collections float.
• B)The size of a firm's net float is primarily a function of its natural cash flow synchronization and how it clears its cheques.
• C)Lockbox systems are used both for security purposes and to decrease the firm's net float.
• D)If a firm speeds up its collections and slows down its disbursements, this will reduce its net float.

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Definitions:

Nonrival

A characteristic of a good or service indicating that one person's consumption does not diminish the availability of that good for consumption by others.

Market Economy

An economy in which decisions about production and consumption are made by individual producers and consumers.

Public Goods

Items that cannot be restricted to non-payers and whose consumption by one individual does not diminish availability to others; these are accessible to all, regardless of payment.

Positive Externalities

External benefits.