Which one of the following statements is correct concerning a cash management system that employs both lockboxes and a concentration bank account?

Question

Quizplus · Accepted Answer

When using both lockboxes and a concentration bank account, payments received in a lockbox are transferred to the concentration account. The cash manager then determines how the funds in the concentration account are disbursed, which is option D. Option A is incorrect because not all customer payments have to be submitted to a lockbox. Option B is incorrect because the responsibility for recording payments on customers' accounts is typically with the firm, not the party collecting checks from the lockbox. Option C is incorrect because the lockbox payments are first transferred to the concentration account before being disbursed. Option E is also incorrect because there may be a balance in the concentration account depending on the timing of disbursements and receipts.

Which One of the Following Statements Is Correct Concerning a Cash