In ____, a Company Has an Ongoing Relationship with a Bank

question 77

Multiple Choice

In ____, a company has an ongoing relationship with a bank that routinely buys its short-term accounts receivable at a discount.

• A) forfaiting
• B) factoring
• C) using bills of exchange
• D) using cash-in-advance
• E) open accounts

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Definitions:

Capital Account

This account records the investments made by owners or shareholders into a company, along with retained earnings and accumulated other comprehensive income.

Capital Balances

The amount of money that partners or owners have invested in a business, often reflected in the equity section of the balance sheet.

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, representing the actual earnings retained.

Closing the Revenue

The process of transferring the balances from revenue accounts to a permanent equity account at the end of an accounting period.