In recording the sale of accounts receivable the commission charged by a factor is recorded as
A) Bad Debt Expense.
B) Commission Expense.
C) Loss on Sale of Receivables.
D) Service Charge Expense.

Question

Quizplus · Accepted Answer

When a company sells its accounts receivable to a factor, the factor charges a commission for its services. This commission is recorded as a service charge expense in the seller's books. Therefore, choice D is the best option. Choices A, B, and C are not applicable in this scenario.

In Recording the Sale of Accounts Receivable the Commission Charged