High Point Hotel (HPH)has $165,000 in Accounts Receivable

question 23

Multiple Choice

High Point Hotel (HPH) has $165,000 in accounts receivable.To finance a major purchase,the company assigns these receivables to Cross Town Bank.Which one of the following statements correctly describes this transaction?

• A)HPH will immediately receive $165,000 and will have no further obligation related to these receivables.
• B)HPH will receive some amount of cash immediately while maintaining full responsibility for any uncollected receivables.
• C)Cross Town Bank accepts full responsibility for the collection of the accounts receivables and, in exchange, immediately pays HPH a discounted value for its receivables.
• D)Cross Town Bank accepts full responsibility for collecting the accounts receivables and pays HPH a discounted price for the accounts collected after the normal collection period has elapsed.
• E)HPH receives the full amount of its receivables upon assignment but must reimburse Cross Town Bank for any uncollected account.

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