Pledging Accounts Receivable

question 187

Multiple Choice

Pledging accounts receivable:

• A)is similar to factoring in that the receivables no longer belong to the borrowing firm.
• B)may involve recourse which means that the borrower is responsible for losses from uncollectible accounts.
• C)always requires the lender to review each account individually and determine which ones are creditworthy before agreeing to a loan.
• D)is a relatively inexpensive form of financing.
• E)All of the above are correct regarding pledging accounts receivable.