Which Statement Is Correct

question 60

Multiple Choice

Which statement is correct?

• A)Factoring without recourse creates a receivable on the balance sheet.
• B)Factoring with recourse negatively impacts the current ratio.
• C)Factoring without recourse negatively impacts the working capital ratio.
• D)Factoring without recourse creates a liability on the balance sheet.

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Definitions:

Leverage

The use of borrowed funds or other financial instruments to increase the potential return of an investment.

Potential Return

The expected gain or loss from an investment, taking into consideration both the risk and the expected rate of return.

Shareholders

Shareholders are individuals or entities that own shares of stock in a corporation, giving them partial ownership and possibly rights to dividends and a say in company matters.

SEC Registration

The process of filing documents required by the Securities and Exchange Commission prior to offering stock for sale to the public.