Discussion of Float
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A. Checks written by a firm generate collection float
B. checks received by firm create disbursement float
C. In general, a firm's disbursement activities and its collection activities generate float
D. A firms float is negative when its available balance equals its book balance
E. A firm cannot exploit float by using the cash needed to cover check that has not yet cleared
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Solution Summary
This solution discusses the types of activities which result in financial "float" as well as the characteristics of "float."
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In general, a firm's disbursement activities and its collection activities generate float. (Thus, answer c is correct.) Float occurs in one of two ways: checks are received by the payee but the funds are not immediately transferred ...
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