Lending institutions may offer a borrower a percentage of the value of the borrower's accounts receivable so the borrowing firm can continue to operate while it waits to collect on its credit sales. This process is called __________

Question

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The process described in the question is pledging, where the borrower uses their accounts receivable as collateral to obtain a loan. Establishing a line of credit and revolving credit also involve borrowing money from a lending institution, but do not specifically involve using accounts receivable as collateral. Inventory valuation refers to the accounting process of determining the value of a company's inventory.

Lending Institutions May Offer a Borrower a Percentage of the Value