In certain circumstances a company may find it necessary to accelerate the cash inflows potentially generated from its accounts receivable. This can be accomplished through pledging, assigning, or factoring the accounts receivable.
Required:
Explain each of these three arrangements. Include in your discussion an explanation of each agreement, who retains the risks and benefits of ownership, whether or not the agreement is formally recorded in the company's accounting records, and how the agreement is disclosed in the company's financial statements.

Question

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The Answer of In certain circumstances a company may find it necessary to accelerate the cash inflows potentially generated from its accounts receivable. This can be accomplished through pledging, assigning, or factoring the accounts receivable.
Required:
Explain each of these three arrangements. Include in your discussion an explanation of each agreement, who retains the risks and benefits of ownership, whether or not the agreement is formally recorded in the company's accounting records, and how the agreement is disclosed in the company's financial statements.

In Certain Circumstances a Company May Find It Necessary to Accelerate