Which of the Following Is a CORRECT Statement Regarding Methods

question 184

Multiple Choice

Which of the following is a CORRECT statement regarding methods to speed up the collection of cash from receivables?

• A)Factoring is used frequently by companies since it is an inexpensive way to raise cash.
• B)Credit card companies will charge a fee of 20-30% of the total amount of the sale.
• C)The company that factors its receivables maintains control over the collection process.
• D)Credit Card Discount Expense is reported on the income statement.

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Definitions:

Straight-line Method

A method of calculating depreciation and amortization by evenly distributing the cost of an asset over its useful life.

Salvage Value

The projected value at which an asset can be sold after its period of usefulness, utilized in the computation of depreciation costs.

Depreciated

The reduction in value of an asset over time due to wear and tear, age, or obsolescence, commonly used in accounting to allocate the cost of an asset over its useful life.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is becoming the global standard for the preparation of public company financial statements.