Dexter Companies Has a Conventional Factoring Arrangement with Its Local

question 45

Multiple Choice

Dexter Companies has a conventional factoring arrangement with its local bank. Which one of the following would be a common characteristic of that type of financing arrangement?

• A) Dexter Companies will receive the full amount of the accounts receivables included in this arrangement on an agreed upon date sometime in the future.
• B) The responsibility for collecting the covered receivables lies with Dexter Companies.
• C) Any bad debt that results from an account receivable included in this arrangement will be a cost to the bank.
• D) Dexter Companies will pay a monthly fee to the bank and in turn will receive payment for the full amount of its accounts receivables.
• E) The arrangement keeps the receivables as an asset of Dexter Companies but places a lien on those accounts in favor of the lending bank.

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