Asked by Stacie Batchelor on Apr 25, 2024
Verified
If a company decides to factor its receivables without recourse, it will:
A) offer the receivables to a lending institution as collateral.
B) sell receivables to a lender and remain liable for uncollectible accounts.
C) sell the receivables at a discount.
D) offer receivables that are more than 120 days old to a collection agency.
E) none of the above defines factoring receivables.
Factor Receivables
The financial practice of selling accounts receivable to a third party at a discount to immediately generate cash.
Uncollectible Accounts
Accounts receivable that are recognized as not being collectible, representing losses to the company.
Lending Institution
A financial institution that provides loans to individuals or businesses.
- Gain insight into the various sources of short-term funding and their financial implications.
Verified Answer
PC
Patricia Cardinio7 days ago
Final Answer :
C
Explanation :
Factoring receivables without recourse means the company sells its receivables to a factor (a financial institution) at a discount and is not responsible for collecting the receivables or for any receivables that are not collected.
Learning Objectives
- Gain insight into the various sources of short-term funding and their financial implications.
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