If a Company Adopts an Accounts Receivable Factoring Program, and Accounts

question 102

Multiple Choice

If a company adopts an accounts receivable factoring program, and accounts for the factoring as a sale of receivables, which of the following is true in the period the company starts the program (all else equal) ?

• A) The accounts receivable balance will increase.
• B) Cash flow from operations may increase.
• C) A retroactive restatement is necessary due to a change in accounting principle.
• D) The factoring arrangement needs to be with a consolidated entity to qualify for sale accounting.

---

Definitions:

Three-dimensional

Having or appearing to have length, breadth, and depth; often used to describe objects or images that have a perception of depth.

Fixation

An obsessive focus or attachment to someone or something, potentially causing psychological issues.

Arrangement

The act of organizing or placing things in a specific order or pattern.

Insight

The capacity to gain an accurate and deep intuitive understanding of a person or thing, often leading to a breakthrough or solution.