A Company Regularly Sells Its Receivables to a Factor Who

question 84

Multiple Choice

A company regularly sells its receivables to a factor who assesses a 2% service charge on the amount of receivables purchased.Which of the following statements is true for the seller of the receivables?

• A)The loss section of the income statement will increase each time receivables are sold.
• B)The credit to Accounts Receivable is less than the debit to Cash when the accounts are sold.
• C)Operating expenses will increase each time accounts are sold.
• D)The other expenses section of the income statement will increase each time accounts are sold.

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Definitions:

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Mosses are small, non-vascular plants that typically grow in dense green clumps or mats, often in damp or shady locations.

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Primitive plants belonging to the genus Psilotum, characterized by simple branching stems and lacking true leaves and roots.

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The complete set of chromosomes present in the nucleus of a cell or organism, usually occurring in pairs in diploid organisms.

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The haploid stage in the life cycle of plants and algae that produces gametes (sex cells) through mitosis.