A Type of Short-Term Loan Where the Borrower Sells Its

question 336

Multiple Choice

A type of short-term loan where the borrower sells its receivables to the lender up-front, but at a discount to face value, is called:

• A) A compensating balance.
• B) Assigned receivables financing.
• C) A letter of credit.
• D) Factored receivables financing.
• E) A bond.

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Definitions:

Conversion Costs

The expenses incurred in the process of converting raw materials into finished products, typically including labor and overhead costs.

Equivalent Units

A concept in process costing that converts partially completed units into a smaller number of fully completed units based on the percentage of completion.

Beginning Work in Process Inventory

The value of partially finished goods at the start of an accounting period.

Assembly Department

A section within a manufacturing facility where components are assembled into finished goods.