When customers of an equipment manufacturing unit buy equipment on credit and then delay making payments, they receive a bill from a collection agency. What relationship does the collection agency have with the manufacturer?
A)Trade credit
B)Revolving credit agreement
C)Factoring
D)Short-term bank loans

Question

Quizplus · Accepted Answer

The collection agency is involved in factoring, where the manufacturer sells its accounts receivable to the agency at a discount to get immediate cash.

When Customers of an Equipment Manufacturing Unit Buy Equipment on Credit