Which of the following is the best definition of zero-balance account?
A) The costs associated with holding too little cash.
B) An automated teller machine card used at the point of purchase to avoid the use of cash. As this is not a credit card, money must be available in the user's bank account.
C) A chequing account in which a zero balance is maintained by transfers of funds from a master account in an amount only large enough to cover cheques presented.
D) The need to hold cash to satisfy normal disbursement and collection activities associated with a firm's ongoing operations
E) A firm's desired cash level as determined by the trade-off between carrying costs and shortage costs.
Correct Answer:
Verified
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