If Receivables Are Used as Collateral in Borrowing Transactions

question 72

Multiple Choice

If receivables are used as collateral in borrowing transactions,

• A) the receivables generally come under the control of the lender.
• B) a liability is reported on the borrower's statement of financial position.
• C) the receivables will be reported as a liability.
• D) the transaction would be reported as a sale.

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Definitions:

Gross Profit Percentage

A financial metric that indicates the portion of revenue that exceeds the cost of goods sold, expressed as a percentage.

Non-Controlling Interest

The portion of equity interest in a subsidiary not attributable to the parent company, representing minority shareholders' claim on assets and earnings.

Intercompany Gain

Profit derived from transactions between subsidiaries or divisions of the same company.

Consolidated Income Statement

Consolidated Income Statement is a financial statement that aggregates the financial performance of a company and its subsidiaries, presenting the overall income, expenses, and net income.