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:

Bailment Contract

An agreement where personal property is transferred from the bailor to the bailee for a specific purpose, with the expectation of return.

Bailee Liability

refers to the legal responsibility of a bailee (a person or entity who temporarily holds property belonging to another) to take reasonable care of the goods in their custody.

Abandoned Property

Abandoned property refers to assets or possessions left by an owner who has intentionally relinquished all rights to its control and ownership.

Engagement Ring

A ring traditionally given in Western cultures by a person to their fiancée as a sign of commitment to marry.