A checking account that never has idle funds-because it draws funds from an interest-bearing master account to cover checks written-is called a:
A) zero-balance account.
B) money market account.
C) deficit account.
D) sweep account.

Question

Quizplus · Accepted Answer

A zero-balance account is designed to always have a zero balance, as funds are automatically transferred from an interest-bearing account to cover any checks written. This ensures that there are no idle funds sitting in the checking account, maximizing the earning potential of the customer's funds. Money market accounts and sweep accounts are different types of accounts that may offer interest, but they do not necessarily have the same features as a zero-balance account. A deficit account, on the other hand, would imply that the account holder has overdrawn their account and owes money to the bank.

A Checking Account That Never Has Idle Funds-Because It Draws