When a Business Factors Its Accounts Receivables,the Business ________

question 87

Multiple Choice

When a business factors its accounts receivables,the business ________.

• A) uses the receivables as security for a loan
• B) no longer has to deal with the collection of the receivables from the customers
• C) receives the total amount of the receivables from the factor
• D) receives cash, less an applicable fee, after the factor collects from the customers

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Definitions:

Contribution Rate

The contribution margin expressed as a percentage of the unit selling price.

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent or salaries.

Net Income

The amount of money left after subtracting all expenses, taxes, and costs from total revenue.

Variable Cost

A cost that varies depending on the level of output or activity, such as materials or labor costs in manufacturing.