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When a Loan Is Secured by Receivables, the Firm Assigns

question 46

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When a loan is secured by receivables, the firm assigns the receivables to the bank. If the firm fails to repay the loan, the bank can collect the receivables from the firm's customers and use the cash to pay off the debt.


Definitions:

Administrative Complaint

A formal allegation or charge filed with a governmental or regulatory agency, often related to violations of laws or regulations.

S Corporation

A special designation for a corporation that allows income, losses, deductions, and credits to pass through to shareholders for federal tax purposes.

Double Taxation

The imposition of taxes on the same income, asset, or financial transaction at two different levels of government.

Tax Benefit

A financial advantage that results from specific tax laws or regulations, allowing for reductions in tax liability.

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