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:

Autonomy

The right or condition of self-government, or in a broader sense, the capacity of an individual to make an informed, uncoerced decision.

Enduring Relationships

Long-lasting interpersonal connections characterized by emotional bonds, support, and mutual respect.

Social Isolation

A state in which an individual lacks a sense of social belonging, true engagement with others, and fulfilling relationships.

Political Freedom

The rights of individuals to participate in political life, including freedoms of speech, assembly, and the ability to vote and run for office.