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NEW QUESTION: 1
The collection of accounts receivable can be accelerated by the use of:
A. Bank drafts.
B. Remittance advices.
C. Turnaround documents.
D. A lockbox system.
Choice "b" is correct. Lockboxes are systems of mailboxes, usually in many locations, where customers
send payments. The company's bank checks these mailboxes frequently and immediately deposits
checks received. This accelerates the collection of accounts receivable. Choice "a" is incorrect. A
turnaround document is a computer output that can later be used as a source document. No relevance to
A/R collections. Choice "c" is incorrect. A bank draft is a document issued by a bank to indicate that
payment has been made. Choice "d" is incorrect. A bank remittance advice is a document generated by a
bank to indicate that payment has been made by a customer.
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