Which of the Following Statements Is FALSE

question 17

Multiple Choice

Which of the following statements is FALSE?

• A)If a factoring arrangement is with recourse,the factor will pay the firm the amount due regardless of whether the factor receives payment from the firm's customers.
• B)In a factoring of accounts receivable arrangement,the firm sells receivables to the lender (i.e. ,the factor),and the lender agrees to pay the firm the amount due from its customers at the end of the firm's payment period.
• C)Businesses can also obtain short-term financing by using secured loans,which are loans collateralized with short-term assets-most typically the firm's accounts receivables or inventory.
• D)Both the interest rate and the factor's fee vary depending on such issues as the size of the borrowing firm and the dollar volume of its receivables.

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Definitions:

Direct Materials Purchases Variance

Direct materials purchases variance analyzes the difference between the actual cost of materials purchased and the budgeted cost, impacting budgeting and cost control.

Variable Overhead

Those overhead costs that vary in total directly and proportionately with changes in production or activity level.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on a standard rate.

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected (budgeted) cost of these materials.