A Firm Sells Its $1,000,000 Receivables to a Factor for $960,000.Average

question 68

Multiple Choice

A firm sells its $1,000,000 receivables to a factor for $960,000.Average collection period is one month.The effective annual rate is:

• A) 27.43%.
• B) 48.00%.
• C) 60.10%.
• D) 63.21%.

---

Definitions:

Safe Deposit Box

A secure container, usually found at a bank, where customers can store valuable personal items.

Bank Statement Adjustment

The process of modifying the balance on a bank statement to reflect transactions that have not been recorded by the bank by the end of the reporting period.

Company Books Adjustment

The process of altering entries in the accounting records to reflect more accurate figures or to record unrecorded transactions.

Control Environment

A collection of guidelines, procedures, and frameworks that establish the foundation for executing internal control throughout the organization.