The float is defined as:
A)the time between when payables are accrued and when they are paid.
B)the time between when the sale is made and when the money is available for use by the receiving firm.
C)the time between when payment is initiated and the time the money is available for use by the receiving firm.
D)the time between when sale is made and the time the payment cheque is issued to the receiving firm.

Question

Quizplus · Accepted Answer

The float is the time it takes for payment to be initiated and for the money to become available for use by the receiving firm. This can be due to delays in processing and transferring funds between banks. Option A refers to the payment cycle, and option D refers to the payment process, but neither covers the entire calculation of float. Option B is close, but it does not specify that the float applies to payments received, not payments made.

The Float Is Defined As