Your ﬁrm maintains a banking relationship with a local bank. When your ﬁrm writes cheques on its account, there is an immediate decrease in the ﬁrm's ___________ balance, but no decrease in its
____________ balance until the cheque is presented to a bank for payment.

Question

Quizplus · Accepted Answer

The firm's book balance decreases immediately when a cheque is written, but the available balance does not decrease until the cheque is actually presented and cleared by the bank.

Your ﬁRm Maintains a Banking Relationship with a Local Bank