Asked by Bailey Glover on Jul 21, 2024
Verified
Factoring can either be with,or without,recourse.
Factoring
A financial transaction where a business sells its accounts receivable to a third party (the factor) at a discount, in order to receive immediate cash.
With Recourse
A term indicating that if the primary party defaults on an obligation, the lender or third party has the right to seek repayment from the signer of the instrument.
- Understand the role of factoring in financial management and its accounting treatment.
Verified Answer
KS
kadesha suttonJul 23, 2024
Final Answer :
True
Explanation :
Factoring with recourse means that the factor can demand payment if the debtor does not pay, while factoring without recourse means that the factor cannot demand payment from the debtor. This statement is true.
Learning Objectives
- Understand the role of factoring in financial management and its accounting treatment.