Question

If proceeds are paid with a personal check, what should be done?

1) Pay-out should be made before clearing the funds
2) The funds need to be placed for "collection" before recording
3) The funds must be "collected" before recording and disbursement
4) The check must be deposited only for collection at the buyer's bank
5) The check should be rejected

Answer 1

When proceeds are paid with a personal check, the funds must be collected before recording and disbursement. Option 3

Step-by-step explanation:

When proceeds are paid with a personal check, the appropriate action would be to follow step 3) The funds must be 'collected' before recording and disbursement.

This means that the check should be deposited in the recipient's bank in order to allow the bank to collect the funds from the buyer's account. Once the check has cleared and the funds have been collected, the payment can then be recorded and the appropriate disbursement can be made. Option 3