Accounts Receivable May Be Used as a Source of Financing

question 105

Multiple Choice

Accounts receivable may be used as a source of financing by

• A) pledging the receivables as loan collateral.
• B) "factoring" the receivables to a finance company.
• C) selling securities backed by the receivables.
• D) All of these options are correct.

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Definitions:

Outstanding Bonds

Bonds issued by a company or government that are currently held by investors and have not yet matured or been redeemed.

Remaining Life

The estimated time period during which an asset is expected to be economically usable, with its cost being depreciated over this duration.

Consolidation Process

The consolidation process involves combining the financial statements of a parent company with those of its subsidiaries to produce a single set of financial statements that represent the financial condition and operations of the entire group as a single entity.

Acquisition

Acquisition refers to the process where one company takes over controlling interest in another company, either through purchase of shares or assets.