The Process of Using Accounts Receivable as Security for a Loan

question 32

True/False

The process of using accounts receivable as security for a loan is known as factoring accounts receivable.

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Definitions:

Supplies

Supplies are consumable items used in the daily operations of a business, such as office or cleaning materials, that are not resold to customers.

Petty Cash

A small amount of cash on hand used for minor, incidental expenses of a business.

Petty Cash Fund

A small amount of cash kept on hand for making minor payments.

Valid Receipts

Documents that serve as proof of a transaction, showing essentials like the date, items purchased or services rendered, and the amount paid.