A Firm May Factor Its Accounts Receivable to a Bank

question 95

Multiple Choice

A firm may factor its accounts receivable to a bank or other financial institution in exchange for cash. Which of the following is/are not true?

• A)The lender physically controls the receivables and collects cash from customers.
• B)Accounts receivable that the firm has factored do not appear on the balance sheet.
• C)The firm has sold the accounts receivable.
• D)The firm should disclose the factoring arrangement in its financial reports.
• E)None of the above.

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Definitions:

Prefrontal Cortex

An area at the very front of the brain associated with complex cognitive behavior, decision making, and moderating social behavior.

Brain Tissue

The biological fabric comprising the brain, including neurons and glial cells.

Ventricles

Hollow structures within the brain that produce and contain cerebrospinal fluid, playing a crucial role in protecting the brain.

Phobia

An intense, irrational fear of specific objects, situations, or activities that leads to avoidance behavior.