A Company Factored $40,000 of Its Accounts Receivable and Was

question 152

True/False

A company factored $40,000 of its accounts receivable and was charged a 1% factoring fee.The journal entry to record this transaction would include a debit to Cash of $39,600,a debit to Factoring Fee Expense of $400,and credit to Accounts Receivable of $40,000.

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Definitions:

Price Fixing

An illegal agreement among competitors to set, raise, or stabilize prices or competitive terms.

Criminally Liable

The legal responsibility one holds for committing a crime, subjecting them to criminal prosecution and penalties.

Vicarious Liability

A legal principle where an individual or entity is held responsible for the actions or omissions of another person, typically in employment situations.

Scope of Employment

Refers to the range of activities and duties that an employee is expected to perform as part of their job.