Which of the Following Statements Is False

question 46

Multiple Choice

Which of the following statements is false?

• A) In a pledging of accounts receivable agreement, the lender reviews the invoices that represent the credit sales of the borrowing firm and decides which credit accounts it will accept as collateral for the loan, based on its own credit standards.
• B) With a trust receipts loan or floor planning, all inventory items are held in a trust as security for the loan.
• C) If the factoring agreement is without recourse, the borrowing firm must receive credit approval for a customer from the factor prior to shipping the goods. If the factor gives its approval, the firm ships the goods and the customer is directed to make payment directly to the lender.
• D) In a warehouse arrangement, the inventory that serves as collateral for the loan is stored in a warehouse.

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