Answer (B) is correct . A ZBA is used to manage cash collections. It has a zero balance at the beginning of each day. At day’s end, a transfer is made to the ZBA to cover the checks presented. They do not affect the disbursement (payment) float.
Answer (A) is incorrect because A ZBA results in a higher balance in the account from which short-term investments are made. Thus, it reduces the net cost of cash management.
Answer (C) is incorrect because A ZBA is intended to reduce bank balances.
Answer (D) is incorrect because A ZBA reduces the time devoted to cash management.
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