Question

Which of the following best describes the availability​ float? A. how long it takes the firm to process the check and deposit it in the bank B. how long it takes before payments to suppliers actually result in a cash outflow for the firm C. how long it takes for a firm to be able to use funds after a customer has paid for its goods D. how long it takes before the bank gives the firm credit for the funds

Answer 1

The correct answer is option A.

Step-by-step explanation:

Availability float refers to the time difference between when the check is deposited and when the money is transferred to the recipient's account.

The time difference exists because the bank has to process the physical check before transferring the funds.

So the availability float can also be defined as the time taken by a bank to process and honor a check and transfer the funds to the recipient's bank.