Asked by Ethan Calura on Jun 01, 2024
Verified
When a lender uses trust receipts in financing a borrower's inventory:
A) the specific units of inventory pledged as collateral are identified.
B) the lender has a general claim on all of the borrower's inventory.
C) the lender retains physical control over the inventory.
D) public warehouses are frequently utilized.
Trust Receipts
Documents acknowledging the receipt of goods by a trustee while detailing the terms of an agreement for selling or holding the goods.
Collateral
An asset backing a loan. In the event of default the collateral becomes the property of the lender to satisfy the obligation. Also called security for the loan.
Public Warehouses
Warehousing facilities operated by third parties that offer storage and handling services to the public for a fee.
- Apprehend the basic principles of controlling working capital and its various segments.
Verified Answer
ZK
Zybrea KnightJun 06, 2024
Final Answer :
A
Explanation :
Trust receipts specifically identify the units of inventory pledged as collateral, giving the lender targeted security for their loan.
Learning Objectives
- Apprehend the basic principles of controlling working capital and its various segments.