KJ Enterprises estimates that it takes, on average, 3 days for their customers' payments to reach them, 1 day for the payments to be processed and deposited by their bookkeeping department, and 2 more days for the checks to clear once they're deposited. What is their collection float?
A) 1 days
B) 2 days
C) 3 days
D) 6 days

Question

Quizplus · Accepted Answer

The collection float is the time between when an account receivable is created and when funds are actually received. In this case, the estimated time is 3 + 1 + 2 = 6 days. Therefore, the best choice is D.

KJ Enterprises Estimates That It Takes, on Average, 3 Days