A minimum checking account balance that a firm must maintain with bank to help offset the costs and services such as check clearing and cash management advice is called a balance.
A)transactions
B)compensating
C)precautionary
D)speculative
E)convertible

Question

Quizplus · Accepted Answer

The minimum checking account balance that a firm must maintain with a bank to offset the costs of services such as check clearing and cash management advice is known as a compensating balance. This balance acts as a form of collateral for the bank, and in exchange, the bank provides certain benefits and services to the firm. Precautionary, speculative, and convertible balances do not relate to checking accounts and are not relevant to this question. While a transaction balance is also related to checking accounts, it does not serve the same purpose as a compensating balance.

A Minimum Checking Account Balance That a Firm Must Maintain