Which of the following practices will reduce a firm's collection float?
I.Installing a lockbox system
II.Utilizing zero-balance accounts
III.Depositing checks daily rather than weekly
IV.Reducing the processing delay by one day
A)I and III only
B)II and IV only
C)I, II, and III only
D)I, III, and IV only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

Installing a lockbox system (I) will reduce the float as the payments are sent directly to the bank and processed faster. Depositing checks daily rather than weekly (III) will also reduce the float as the checks will be processed faster. Reducing the processing delay by one day (IV) will further reduce the float. Utilizing zero-balance accounts (II) will not necessarily reduce the float but can help with cash management. Therefore, the correct answer is I, III, and IV only (D).

Which of the Following Practices Will Reduce a Firm's Collection