Reducing Idle Bank Balance
Increasing Collection
Increasing Creditors
Reducing Bank Transactions
Answer is Right!
Answer is Wrong!
The correct answer is: A. Reducing Idle Bank Balance
Concentration banking is a system in which a company deposits its cash in a single bank account, rather than in multiple accounts at different banks. This can help to reduce idle bank balances, as the company will only have one account to monitor. Additionally, concentration banking can help to improve cash flow, as the company will be able to more easily track its cash position and make sure that it has enough money on hand to meet its obligations.
Here is a brief explanation of each option:
- Option B: Increasing Collection. Concentration banking does not help in increasing collection. Collection is the process of collecting money that is owed to a company. Concentration banking does not affect this process.
- Option C: Increasing Creditors. Concentration banking does not help in increasing creditors. Creditors are people or companies that lend money to a company. Concentration banking does not affect the number of creditors that a company has.
- Option D: Reducing Bank Transactions. Concentration banking can help to reduce bank transactions. This is because the company will only have one account to deposit and withdraw money from. This can save time and money on bank fees.