To Reduce the Cost of Collecting Its Accounts Receivable, a Company

question 24

Multiple Choice

To reduce the cost of collecting its accounts receivable, a company sells its accounts receivable to a financial organization. The service is called:

• A) collection agency advance
• B) lock-boxing
• C) Factoring
• D) Funding

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Definitions:

Bank Balance

Bank balance refers to the total amount of money available in a bank account at a specific point in time, as recorded by the financial institution.

Book Balance

The balance in a financial account according to a company's accounting records, not necessarily reflective of available funds.

Statement of Cash Flows

A report detailing the total cash received by a company from its operational activities and external investments, alongside the total cash expenditures for business activities and investments over a specific time frame.

Net Sales Revenue

The amount of revenue from sales of goods or services after subtracting returns, allowances for damaged or missing goods, and discounts.