A Company Regularly Sells Its Receivables to a Factor Who

question 122

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 income and expense section of the income statement will increase each time accounts are sold.

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Definitions:

Complex Tricks

Elaborate or sophisticated methods used to achieve a specific goal, often requiring skill and ingenuity.

Resistance To Extinction

The persistence of a learned behavior even when it is no longer reinforced, often observed in conditioning experiments.

Stimulus Generalization

The tendency for the conditioned response to be evoked by stimuli that are similar to the conditioned stimulus.

Resistance To Extinction

The phenomenon where a learned behavior persists even after the reinforcement previously maintaining it is removed, highlighting the behavior's resilience.