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.

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Definitions:

Product Life Cycle

The advancement of a product through phases such as its launch, growth, peak, and eventual decline in the marketplace.

Early Majority

A segment of the population that adopts new products or innovations after the innovators and early adopters have done so, representing a significant portion of the market.

Diffusion of Innovation

The process by which a new idea, product, or behavior spreads through populations and cultures over time.