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

The process described is factoring, which involves a firm selling its accounts receivables to a bank or factoring company in exchange for immediate cash (less a percentage fee). This transfers the responsibility of collecting the accounts receivables to the bank/factoring company. The other answer choices are not applicable to the described process.

The Process That Transfers the Responsibility for Collecting Accounts Receivables