Which of the Following Is the Major Risk Associated with Receivables

question 95

Multiple Choice

Which of the following is the major risk associated with receivables?

• A)they may be sold to a bank with recourse.
• B)they may be recorded as long-term when in fact they will be realized in the current period.
• C)they will not be realized for the entire amount due.
• D)they are pledged as collateral as disclosed in the footnotes to financial statements.

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Definitions:

Common Stock

A type of security that signifies ownership in a corporation, entitling the shareholder to a share of the corporation's profits and assets.

Consolidated Earnings Per Share

A calculation of the earnings per share of a parent company and its subsidiaries, providing a measure of the combined profitability on a per-share basis.

Convertible Securities

Convertible securities are financial instruments, like bonds or preferred stocks, that can be converted into a predetermined number of the issuer's equity shares.

Subsidiary

A company that is completely or partly owned and partly or wholly controlled by another company, known as the parent company.