Which Statement Is Correct

question 63

Multiple Choice

Which statement is correct?

• A)A transfer with recourse means that the purchaser of the receivables takes the collection risk.
• B)A transfer without recourse means that the seller of the receivables takes the collection risk.
• C)Factoring with recourse reduces a current ratio that is >1.
• D)Factoring without recourse creates a liability on the balance sheet.

---

Definitions:

Payor Bank

The bank upon which a check is drawn and that is responsible for paying the amount specified on the check to the payee.

Collected

Refers to the process of gathering or accumulating items, information, or funds.

Electronic Funds Transfers

The transfer of money between accounts by electronic means rather than the use of cash or paper documents.

Float Time

The period between when a check is deposited into a bank account and the time the funds are available for use.