A Company Regularly Sells Its Receivables to a Factor Who

question 191

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) Selling 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:

Maintaining Flexibility

The act of regularly engaging in activities that preserve or enhance the range of motion and elasticity of the muscles and tendons.

Joints

The points at which two bones connect in the body, allowing for movement and flexibility.

Ill-Fitting Clothing

Clothing that does not fit properly on the body, often leading to discomfort or style issues.

Poor Posture

An alignment of the body that is not optimal, often leading to discomfort, pain, and potentially long-term musculoskeletal issues.