Which of the Following Statements Is Correct

question 123

Multiple Choice

Which of the following statements is correct?

• A) In a factoring arrangement,the factor always performs three functions: (1)credit checking, (2)lending,and (3)receivables collection.
• B) The pledging of accounts receivable involves a transfer of the risk associated with accounts receivable from the borrower to the lender.
• C) In a factoring arrangement,the seller can select various combinations of credit checking,lending,and risk bearing the factor performs by changing provisions in the factoring agreement.
• D) In a factoring agreement,the factor would not perform the credit checking and risk taking functions without performing the lending function,because the former are required before the factor can lend to the seller.
• E) The financing of accounts receivable involves an agreement which is informal and non-binding,which makes it difficult for the factor to protect itself.

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