Factoring Accounts Receivable Is Not a Form of Secured Short-Term

question 80

True/False

Factoring accounts receivable is not a form of secured short-term borrowing. It entails the sale of accounts receivable at a discount to obtain the required short-term funds.

---

Definitions:

Liabilities

Financial obligations or debts owed by a business to external parties or individuals.

Accounts Payable

Funds that a company needs to pay back to its suppliers or creditors for products and services that it has acquired.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, showing revenues, expenses, and profits or losses.

Prepaid Expense

Prepaid Expense represents payments made for expenses which benefits have not yet been received, recognized as assets until they are incurred.