A transaction in which a company sells its receivables and immediately receives cash for operating and other needs is called _____.
A) adjusting
B) assigning
C) factoring
D) discounting

Question

Quizplus · Accepted Answer

This is because factoring involves selling accounts receivable to a third party (known as a factor) at a discount in exchange for immediate cash. Option A, adjusting, refers to changes made to accounts to reflect the correct balance. Option B, assigning, refers to transferring ownership of an asset or a right, which may include accounts receivable. Option D, discounting, involves selling accounts receivable to a financial institution at a discount, and typically requires the seller to bear some of the risk if the accounts become delinquent.

A Transaction in Which a Company Sells Its Receivables and Immediately