Asked by Britanny Espinosa on May 02, 2024
Verified
The process of using accounts receivable as security for a loan is known as pledging accounts receivable.
Pledging Accounts Receivable
The use of accounts receivable as collateral to secure a loan, without transferring the title.
- Understand the accounting procedures for various receivables transactions, including transactions involving sales with bank credit cards and using accounts receivable as collateral for loans.
Verified Answer
BM
Blair ManleyMay 09, 2024
Final Answer :
True
Explanation :
Pledging accounts receivable involves using accounts receivable as collateral for obtaining a loan from a lender. The borrower pledges their unpaid customer invoices to the lender, who then assumes the right to collect payment from those customers in the event the borrower fails to repay the loan.
Learning Objectives
- Understand the accounting procedures for various receivables transactions, including transactions involving sales with bank credit cards and using accounts receivable as collateral for loans.
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