In a Factoring of Accounts Receivable with Recourse, Which Party

question 48

Multiple Choice

In a factoring of accounts receivable with recourse, which party bears (indicated by * in the answer alternatives) the cost of bad debts and sales adjustments? $$\begin{array} { | l | l | l | l | } \hline &\text { } & \text {bad depts} &\text {sales adjuistments} \\\hline 1&\text { transferor } & *& * \\\hline 2 &\text { factor } & &* \\\hline &\text { transferor } & & * \\\hline 3& \text { factor } & * & \\\hline& \text { transferor} & *& \\\hline 4 &\text { factor } & *\\\hline\end{array}$$

• A) Choice 1
• B) Choice 2
• C) Choice 3
• D) Choice 4

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Definitions:

Securities Taxes

Taxes levied on the earnings from stocks, bonds, or other investment assets.

Wealth Destruction

The process by which the value of an asset or investment decreases significantly, reducing overall wealth.

Wall Street

The financial district of New York City, symbolizing the financial markets and institutions of the United States.

Slums

Highly populated urban residential areas consisting mostly of closely packed, decrepit housing units in a situation of deteriorated or incomplete infrastructure.