Treasury Operations and Banking Relations Flashcards
7 cards from real CCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Treasury Operations and Banking Relations flashcards as text
Under the Uniform Commercial Code (UCC), what is the standard deadline by which a bank must return a dishonored check to avoid being liable for its payment?
Answer: By midnight of the banking day following receipt
Under UCC Article 4, a bank must return a dishonored check by midnight of the banking day following the day it received the item (the 'midnight deadline').
A treasury team is evaluating whether to use a lockbox or an in-house collection process. Which factor most strongly favors choosing a bank lockbox?
Answer: Customers are geographically dispersed and mail float is significant
Lockboxes reduce mail float by intercepting payments close to customers, making them most valuable when payers are geographically dispersed.
What is 'availability float' in the context of bank collections?
Answer: The delay between when a check is deposited and when the funds are available for use
Availability float (also called collection float) is the time between deposit and when the bank makes the funds available in the collected balance.
A company implements a positive pay system. What risk does this primarily mitigate?
Answer: Check fraud through altered payee names or counterfeit checks
Positive pay matches checks presented for payment against the company's issued check file, flagging any checks with altered amounts, payees, or that are not on the issued list.
In a Request for Proposal (RFP) process for banking services, what is the purpose of a 'banking needs assessment' conducted prior to issuing the RFP?
Answer: To document the company's current service volumes, fees, and requirements so banks can bid accurately
A banking needs assessment documents current service usage, transaction volumes, and requirements so that prospective banks can provide accurate and comparable bids.
Which of the following best describes a 'sweep account' arrangement in treasury management?
Answer: An arrangement that automatically invests excess balances above a target level into short-term investments overnight
A sweep account automatically moves excess funds above a set target balance into overnight investments (e.g., money market funds) and reverses the sweep each morning.
What is the primary distinction between a 'ledger balance' and a 'collected balance' in a bank account?
Answer: Ledger balance reflects all posted debits and credits; collected balance excludes items not yet cleared
The ledger balance includes all posted transactions, while the collected balance subtracts items still in the float (not yet cleared by the paying bank), reflecting actually available funds.