To raise money, Fawcett Productions sold its accounts receivable to a ____. In doing so, Fawcett received cash and shifted to the other company both the task of collecting and the risk of nonpayment.

Question

Quizplus · Accepted Answer

Accounts receivable can be sold to a factor, which is a specialized financial company that purchases receivables for a discounted price and collects the full amount from the customers directly. By selling their accounts receivable, Fawcett Productions received immediate cash flow while transferring the collection risk and responsibility to the factor. Therefore, choice (C) is the best answer.

To Raise Money, Fawcett Productions Sold Its Accounts Receivable to a ____