When Accounts Receivable Are Factored: the Borrower Sells the Receivable;

question 82

True/False

When accounts receivable are factored: the borrower sells the receivable; accounts receivable balances are removed from the balance sheet; the customer payment is made to the factor; and interest is charged on the funds advanced.

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Definitions:

Consolidated Income Tax Return

A single income tax return filed by a group of affiliated corporations, treating the entire group as a single taxpayer.

Subsidiaries

Companies that are controlled by another company, known as the parent company, through ownership of a majority of voting stock.

Separate Return

A tax return filed by an individual or entity separately from other entities or individuals, particularly in the context of married couples filing separately.

Mutual Ownership

A type of ownership where two or more parties jointly own an asset or a company, sharing in its risks and profits.