Which of the Following Statements Is False

question 29

Multiple Choice

Which of the following statements is false?

• A) If a factoring arrangement is with recourse, the factor will pay the firm the amount due regardless of whether the factor receives payment from the firm's customers.
• B) In a factoring of accounts receivable arrangement, the firm sells receivables to the lender (i.e., the factor), and the lender agrees to pay the firm the amount due from its customers at the end of the firm's payment period.
• C) Businesses can also obtain short-term financing by using secured loans, which are loans collateralized with short-term assets-most typically the firm's accounts receivables or inventory.
• D) Both the interest rate and the factor's fee vary depending on such issues as the size of the borrowing firm and the dollar volume of its receivables.

---

Definitions:

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

Profit Centers

Segments or areas within an organization that are responsible for generating their own revenues and profits.

Square Footage

Square Footage is a measurement of area used primarily in the United States to indicate the size of a space, such as a room, house, or building, measured in feet.

Production Departments

Specific areas or divisions within a manufacturing facility focused on producing particular goods or services.