Accounts Receivable May Be Used as a Source of Financing

question 23

Multiple Choice

Accounts receivable may be used as a source of financing by:

• A) collecting the receivables.
• B) writing off the receivables as bad debt expense.
• C) buying securities backed by the receivables.
• D) factoring the receivables to a finance company.

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Definitions:

Statement of Cash Flows

A financial report that shows how changes in balance sheet and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Activities Reported

A summary or record of actions, events, or operations that have taken place within a specific period.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing insight into what the company owns and owes as well as the amount invested by shareholders.

Purpose

The justification for the existence, creation, or action of something.