When Receivables Are Factored with Recourse and Recorded as a Loan

question 13

Multiple Choice

When receivables are factored with recourse and recorded as a loan, the transferor generally

• A) Recognizes the cost of the transfer over the term of the related loan
• B) Recognizes an immediate loss or expense and removes the receivables from the books
• C) Records a payable to factor for expected sales adjustments
• D) Does not record sales adjustments on the factored receivables

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Definitions:

Kingdom of Ghana

An ancient West African empire, known for its wealth in gold and trade networks, existing from around the 6th to 13th centuries AD.

Ethnic Communities

Groups of people sharing a common racial, national, tribal, religious, linguistic, or cultural origin or background.

West African Slavery

The capture and sale of people from West Africa into bondage, pivotal to the Atlantic slave trade from the 16th to the 19th century.

Land Ownership

The legal right of an individual or entity to possess, use, and control a distinct piece of land.