In Certain Circumstances a Company May Find It Necessary to Accelerate

question 42

Essay

In certain circumstances a company may find it necessary to accelerate the cash inflows potentially generated from its accounts receivable.This can be accomplished through pledging, assigning, or factoring the accounts receivable.
Required:
Explain each of these arrangements.Include in your discussion an explanation of each agreement, who retains the risks and benefits of ownership, whether or not the agreement is formally recorded in the company's accounting records, and how the agreement is disclosed in the company's financial statements.

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Definitions:

Sample Size

Sample Size refers to the number of observations or individuals in a subset of a population used for statistical analysis.

Parameter

A characteristic or constant factor that defines or limits a system; in statistics, it is a numerical attribute of a population.

Unbiased Estimator

A statistic used to estimate a parameter that is expected to be equal to the true parameter of the population.

Population Parameter

A numerical characteristic or measure of an entire population, such as a mean (average), variance, or proportion.