In Managing Accounts Receivable the Term 'Factoring' Relates To

question 6

Multiple Choice

In managing accounts receivable the term 'factoring' relates to:

• A) calculating the amount of bad debts expense.
• B) ageing the receivables.
• C) selling the accounts receivable to a business that will then collect the debts.
• D) the proportion of debts expected to become bad.

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Definitions:

Accumulated Depreciation

The cumulative depreciation expense registered for an asset from the time it was initially utilized.

Commercial Substance

An accounting principle that transactions should result in a real change to the economic circumstances of a company, as opposed to being conducted for appearance's sake.

Invoice Price

The amount shown on an invoice as the price of goods or services, prior to any discounts or adjustments.

Fully Depreciated

Term used for an asset that has reached the end of its useful life, with its cost fully allocated across the accounting periods it was in use.