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) and depositing checks daily rather than weekly (III) both reduce the time it takes to receive and process payments, which reduces the collection float. Utilizing zero-balance accounts (II) can help manage cash balances but does not directly reduce collection float. Reducing processing delay by one day (IV) can also help reduce float. Therefore, the correct answer is D, which includes choices I, III, and IV.

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