The Primary Advantage That Factoring Accounts Receivable Provides Is

question 36

Multiple Choice

The primary advantage that factoring accounts receivable provides is

• A) the flexibility it gives to the borrower.
• B) that the financial institution bears the risk of collection.
• C) the low cost as compared with other sources of short-term financing.
• D) that the financial institution services the accounts.

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Definitions:

Economic Order Quantity

The optimal quantity of inventory to order that minimizes the total costs associated with ordering and holding inventory.

Carrying Costs

Expenses associated with holding inventory, such as storage, insurance, and opportunity costs, until it is sold or used in production.

Annual Requirements

The total quantity or volume of resources, goods, or services needed by an organization or project over the course of a year.

Pull System

A method of production control where downstream activities signal their needs to upstream activities, promoting just-in-time production and minimizing inventories.