What is Net Float

The term float is used in finance to represent short-term inaccuracy of a bank balance in the ledger of the company and the bank account. Net float can be defined as the difference between the payment float and availability float.

While payment float can be defined as the difference between the balance in the ledger of the company and bank account of the company. In payment float company ledger will show less amount, than the bank account of the company. It can be better understood through an example, suppose a company issue a check of $10000 for payment to supplier then company ledger will show an outflow of money, but the bank balance will not show the deduction until the check is presented for payment by the supplier.

Availability float is reverse of payment float, in availability float company ledger will show more balance than the bank account. For example if a company receives a check of $10000 from its creditors company will immediately credit it in the ledger, but bank will credit it only when it is deposited in the bank by the company.

0 comments… add one

Leave a Comment

Related pages

fifo method definitionsystematic and unsystematic risk examplesexample of vertical mergermeaning of forfeitingwhat are fictitious assetsexample of inferior goods in economicsautocratic leadership businessconsistency concept in financial accountingmarket oriented pricing advantages and disadvantageshorizontal and vertical analysis of financial statementsexample of price skimming strategyoutstanding salary journal entryadvantages and disadvantages of debit and credit cardsdisadvantages of international trade for developing countriesdefine conglomerate mergerunitary elastic demand graphwhy trial balance is preparedconglomerate organizational structuredescribe the characteristics of a traditional economydisadvantages of social networking for businessesdefinition of centrally planned economyadvantages and disadvantages of lifo and fifodisadvantages and advantages of mixed economyexamples of mixed economic systemrepo rate full formadvantages and disadvantages of global warmingadvantages and disadvantages of horizontal communicationglobalization merits and demeritssupplementary goods economicswhat is fdi and fiihorizontal mergers exampleswhat is the cost concept in accountingdifference between substitute and complementary goodsadvantages and disadvantages of ordinary sharesdifference between capital and drawingstransfer pricing advantages disadvantagesan example of diminishing marginal utilityenvironmental pollution advantages and disadvantagesrepo rate full formfdi abbreviationadvantages and disadvantages of capitalism and socialismpurchased goods on credit journal entriesbearer certificate of depositadvantages and disadvantages of delegation in managementmateriality concept accountingrrbs bankwhat are some characteristics of a traditional economycrossed cheque definitionwhat is the meaning of cagradvantages and disadvantages of accounting ratiosdefine durable goodwhat is fictitious assetexample of capital reserveexamples of cash inflowswhat are the differences between socialism and capitalismlimitation of marginal costingcommercial paper ppturbanization meaning in hindidistinguish between socialism and capitalismexamples of consumer goods and capital goodsmerits of capitalismquote driven marketdemand loansexample of skimming pricingauthorized shares vs issued shareswhat are the characteristics of a command economythe main features of a capitalistic economic system aredirect and indirect currency quotesexamples of inelastic demand productswage push inflationexamples of explicit costpenetration pricing advantages disadvantagesdisadvantages of brandingadvantages and disadvantages of communism economyadvantages and disadvantages of bankingurbanisation advantagespure competition marketbraeburn capital website