The process that transfers the responsibility for collecting accounts receivables from a firm to a bank in exchange for a percent of the accounts receivables value is referred to as:
A) Factoring.
B) Issuing trade credit.
C) Field warehousing.
D) Trust receipting.
E) An assignment.

Question

Quizplus · Accepted Answer

Factoring involves a business selling its accounts receivables to a third party (the factor, often a bank) at a discount, in exchange for immediate cash. This process transfers the responsibility of collecting the receivables from the firm to the factor.

The Process That Transfers the Responsibility for Collecting Accounts Receivables