Accounts receivable may be used as a source of financing by
A)pledging the receivables as loan collateral.
B)"factoring" the receivables to a finance company.
C)selling securities backed by the receivables.
D)All of these options

Question

Quizplus · Accepted Answer

All of the options listed can be used to use accounts receivable as a source of financing. Pledging receivables as loan collateral involves using the receivables to secure a loan. Factoring receivables involves selling the receivables to a finance company at a discount, and the finance company then collects the full amount owed from the debtors. Selling securities backed by the receivables involves packaging the receivables into a security and selling that security to investors.

Accounts Receivable May Be Used as a Source of Financing