When Receivables Are Factored with Recourse and Recorded as a Loan

question 13

Multiple Choice

When receivables are factored with recourse and recorded as a loan, the transferor generally

• A) Recognizes the cost of the transfer over the term of the related loan
• B) Recognizes an immediate loss or expense and removes the receivables from the books
• C) Records a payable to factor for expected sales adjustments
• D) Does not record sales adjustments on the factored receivables

Develop skills in time series data interpretation and application to business or economic scenarios.

Understand the importance of using historical data for predictive analytics in various fields.

Comprehend the methodology of calculating average values from given data sets.

Distill complex numerical data into understandable seasonal trends for strategic planning.

---

Definitions:

Debt-Equity Ratio

An economic indicator showing the comparative mix of owner's equity and loans in funding a company's assets.

External Financing

Funds raised from outside the business, typically through borrowing or the issuance of equity.

Flotation Cost

The total costs associated with issuing new stocks or bonds, including underwriting, legal, and registration fees.

Debt-Equity Ratio

A calculation of a corporation's financial risk, determined by dividing its overall liabilities by the equity of its shareholders.