A Factor Purchases Receivables from Businesses for a Fee and Collects

question 104

True/False

A factor purchases receivables from businesses for a fee and collects the remittances directly from customers.

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Definitions:

Contribution Format

A type of income statement layout that separates fixed costs from variable costs to highlight the contribution margin.

Absorption Costing

An accounting method that includes all manufacturing costs, both fixed and variable, in the cost of a produced unit.

Income Statement

A financial statement that shows a company's revenues, expenses, and profit over a specific period, typically a quarter or year.

Net Operating Income

The profit a company makes from its operations, excluding non-operational revenues and expenses like interest and taxes.