If a Company Decides to Factor Its Receivables Without Recourse

question 129

Multiple Choice

If a company decides to factor its receivables without recourse, it will:

• A)offer the receivables to a lending institution as collateral.
• B)sell receivables to a lender and remain liable for uncollectible accounts.
• C)sell the receivables at a discount.
• D)offer receivables that are more than 120 days old to a collection agency.
• E)none of the above defines factoring receivables.

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Definitions:

Formalization

The degree to which rules and procedures are standardized in an organization.

Rules And Procedures

Guidelines and systematic steps established for consistent and orderly conduct or action.

Standardized

The process or practice of making elements uniform or consistent by following a defined set of criteria or standards.

Organic Model

A less formalized structure based on decentralization and cross-functional teams.