Asked by Tajmia Muhammad on Jul 14, 2024
Verified
When firms sell receivables,the receivables number reported in the ending balance sheet only includes the remaining receivables and will overstate the true growth in receivables over the period.
Sell Receivables
The process of selling a company's accounts receivable to a third party at a discount in order to obtain immediate cash.
Ending Balance Sheet
A financial statement showing a company's assets, liabilities, and equity at the final moments of an accounting period.
- Understand the implications of selling receivables and the fair value option on financial statements.
Verified Answer
AT
Angela Talton MBA, MHA, RHIA, CDIP, CCS, CPC, COCJul 21, 2024
Final Answer :
False
Explanation :
When firms sell receivables, the receivables number reported in the ending balance sheet reflects only the remaining receivables, not overstating true growth but accurately representing the current amount of receivables after the sale.
Learning Objectives
- Understand the implications of selling receivables and the fair value option on financial statements.