Which of the Following Statements Is Correct

question 8

Multiple Choice

Which of the following statements is correct?

• A) The factoring of accounts receivable consists of a series of individual cycles as opposed to a continuous process.
• B) Once a factoring agreement is in force,funds from this source are spontaneous in the sense that an increase in sales will automatically generate additional credit from the factor.
• C) One of the main disadvantages of pledging or factoring is the significant lack of flexibility.
• D) One disadvantage of factoring is that it reduces the need of the selling firm to maintain a credit department.
• E) The cost of pledging and factoring generally is very low and the risk bearing fee is incorporated into the interest rate charged on the unpaid balance of the funds advanced by the factor,which is usually one half of one percent above the prime rate.

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Definitions:

Vegetative State

describes a medical condition in which a person is awake but showing no signs of awareness or response to their environment, due to severe brain damage.

Respirator

A device designed to protect the wearer from inhaling harmful dusts, fumes, vapors, or gases.

Joint Tenant

An individual co-holder of a property title under the right of survivorship, meaning the property passes to the surviving holders upon one's death.

Life Insurance Policy

A contract with an insurer that pays a designated beneficiary a sum of money upon the death of the insured person.