Which of the Following Is a Disadvantage of Factoring

question 42

Multiple Choice

Which of the following is a disadvantage of factoring?

• A) ensures an uneven pattern of cash flows
• B) eliminates credit and collection departments
• C) turns accounts receivable into cash quickly
• D) highly expensive source of short-term financing

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Definitions:

Equivalent Units

A measure used in the costing of products in process, which converts partially completed goods into an equivalent number of fully completed units.

Weighted-average

A mathematical calculation that takes into account the varying degrees of importance of the numbers in a data set, assigning more weight to some numbers than others.

Conversion

The process of changing or converting resources into finished goods or services.

Equivalent Units

A concept used in cost accounting to convert the amount of work done on partially finished goods into the number of fully finished units.