When a Firm Factors Its Accounts Receivable as Opposed to Pledging

question 3

Multiple Choice

When a firm factors its accounts receivable as opposed to pledging them, the firm will:

• A)offer the lender the accounts receivable as collateral to the loan.
• B)sell the accounts receivable at a discount to the lender.
• C)in all cases, remain liable for any uncollected accounts sold to the lender.
• D)None of the above

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Definitions:

Dehiscence

The reopening of a wound along a surgical incision or a traumatic injury site, often due to incomplete healing.

Visceral Organs

Encompasses the organs within the main cavities of the body, especially those within the abdominal cavity, such as the liver, stomach, and intestines.

Malodorous

Having a bad smell; emitting an unpleasant odor.

Pulse Oximetry

A noninvasive method to measure the oxygen saturation level of the blood, usually done with a clip-like device on a finger.