If a Company Sells Its Accounts Receivables to a Factor

question 89

Multiple Choice

If a company sells its accounts receivables to a factor

• A) the seller pays a commission to the factor.
• B) the factor pays a commission to the seller.
• C) there is a gain on the sale of the receivables.
• D) the seller defers recognition of sales revenue until the account is collected.

Calculate inventory valuation using different methods like FIFO, LIFO, and weighted average under perpetual and periodic systems.

Analyze the effect of inventory valuation methods on financial statements and tax implications.

Understand the ethical considerations in inventory management and reporting.

Explain the rationale and calculation of the retail inventory method.

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Definitions:

Mere Exposure Effect

A psychological phenomenon in which people tend to develop a preference for things merely because they are familiar with them.

Cognitive Dissonance

The psychological unrest felt by an individual who simultaneously maintains two or more conflicting beliefs, ideas, or values.

Door-In-The-Face

A persuasion technique whereby a large, unreasonable request is first made knowing it will be refused, so that a smaller, more moderate request is more likely to be accepted.

Foot-In-The-Door

A compliance tactic that involves getting a person to agree to a large request by first setting them up by having that person agree to a modest request.