The corporate sweep account is an account
A) that allows companies to maintain zero balances in their checking accounts, with their excess cash moved into an interest earning account.
B) that allows companies to write checks on zero balance accounts with the understanding that when the check is presented for payment, money will be moved from the interest bearing account to the appropriate payment account.
C) that allows companies to move their lock box collections into an interest bearing checking account.
D) a and b are correct.

Question

Quizplus · Accepted Answer

The corporate sweep account is a cash management tool that allows companies to maintain zero balances in their checking accounts by automatically transferring excess money into an interest-earning account (A), and allows them to write checks on zero balance accounts with the understanding that when the check is presented for payment, money will be moved from the interest-bearing account to the appropriate payment account (B). Therefore, options A and B are correct. Option C is incorrect as it refers to a different type of account.

The Corporate Sweep Account Is an Account