The difference between the amount of cash on the firm's books and the amount credited to it by its bank is
A) an overdraft.
B) interest revenue.
C) extended disbursement.
D) float.

Question

Quizplus · Accepted Answer

The difference between the amount of cash on the firm's books and the amount credited to it by its bank is called float. Float occurs because of the time it takes for checks to clear and for funds to be transferred electronically between accounts. If the bank balance is higher than the book balance, the firm has a cash float, while if the book balance is higher, the firm has an overdraft. Interest revenue is earned on bank deposits and extended disbursement refers to the practice of delaying payment to suppliers to manage cash flow.

The Difference Between the Amount of Cash on the Firm's