When Pledging Accounts Receivable

question 53

Multiple Choice

When pledging accounts receivable

• A) title to the receivables reverts to the lender.
• B) the pledges are usually made with recourse.
• C) the pledge arrangements become the new valuation methodology entered in the accounting records.
• D) collection responsibility reverts to the lender.

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Definitions:

Relevant Range

The range of activity within which assumptions about variable and fixed cost behavior are valid.

Activity Level

The volume of production or the degree of activity in a business operation, which can affect variable costs.

Earn Income

The process of receiving payment through work, investments, or business operations.

Unit Variable

A measurement that reflects how variable costs change per unit of production or activity level.