Which of the Following Creates a Secured Short-Term Loan with Accounts

question 11

Multiple Choice

Which of the following creates a secured short-term loan with accounts receivable?

• A) lines of credit
• B) commercial paper
• C) pledge of accounts receivable
• D) factoring of accounts receivable

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Definitions:

Equipment

Physical items purchased for use in operations of a business, often subject to depreciation for tax purposes.

Depreciation

The process of allocating the cost of a tangible asset over its useful lifespan, representing wear and tear, deterioration, or obsolescence.

Section 1250

Section 1250 of the U.S. Internal Revenue Code deals with the tax treatment of gains from the sale of depreciable real property, distinguishing between ordinary income and capital gains.

Short-term Loss

A financial loss realized on the sale or exchange of an asset held for one year or less.