Bristol Machinery Has a Conventional Receivables Factoring Arrangement with a Factor

question 187

Multiple Choice

Bristol Machinery has a conventional receivables factoring arrangement with a factor. This indicates that:

• A) Bristol is responsible for any bad debts.
• B) The money payable under the arrangement will be paid to Bristol at some agreed-upon future date.
• C) Bristol will receive an amount equal to the entire receivables transferred less any bad debts.
• D) Bristol will receive a discounted amount but will not be responsible for any bad debts.
• E) Bristol will receive a discounted amount and will also be responsible for any bad debts.

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Definitions:

Stock Ledger

A record that keeps track of the stock transactions of a company, including shares bought, sold, issued, and returned.

Materials Ledger

A detailed record that tracks the quantity and cost of materials on hand.

Work in Process Account

An account used to record the costs associated with incomplete products in the manufacturing process.

Cost Ledger

A subsidiary ledger that records individual costs associated with specific cost centers or cost objects.