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:

Acid-base Extractions

A technique in organic chemistry used to separate compounds based on their differences in solubility in acidic or basic environments.

Benzoic Acid

An aromatic carboxylic acid with the formula C6H5COOH, used in the manufacture of various cosmetics and pharmaceuticals.

Trichloroacetic Acid

A powerful acetic acid derivative (CCl3COOH), used as a reagent in organic synthesis and as a cauterizing agent in medicine.

Dichloroacetic Acid

A halogenated acetic acid derivative used as a chemical reagent and in the treatment of certain medical conditions, characterized by two chlorine atoms attached to the carbon atom adjacent to the carboxyl group.