Which Statement Is Correct

question 1

Multiple Choice

Which statement is correct?

• A)A transfer with recourse means that the purchaser cannot go back to the company for compensation of bad debts.
• B)A transfer with recourse means that the purchaser of the receivables takes the collection risk.
• C)A transfer with recourse means that the seller of the receivables takes the collection risk.
• D)A transfer without recourse means that the seller of the receivables takes the collection risk.

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Definitions:

Consolidated Balance Sheet

An aggregated financial statement that shows all assets, liabilities, and equity of a parent company and its subsidiaries.

Control Investment

An investment in which the buyer gains significant influence or control over the operations of the investee.

Acquisition Differential

The Acquisition Differential is the difference between the purchase price of a company and the fair value of its identifiable net assets at the time of acquisition.

Retained Earnings

The portion of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business, or to pay debt.