In a factoring of accounts receivable with recourse,which party bears (indicated by * in the answer alternatives) the cost of bad debts and sales adjustments? $$\begin{array} { | c | c | c | }
\hline & \text { Bad debts } & \text { Sales adjustments } \
\hline 1 \text { Transferor } & * & * \
\hline 2 \text { Factor } & & * \
\hline \text { Transferor } & & * \
\hline \text { 3 Factor } & * & \
\hline \text { Transferor } & * & \
\hline \text { 4 Factor } & * & \
\hline
\end{array}$$

Question

In a factoring of accounts receivable with recourse,which party bears (indicated by * in the answer alternatives) the cost of bad debts and sales adjustments? $$\begin{array} { | c | c | c | } 
\hline & \text { Bad debts } & \text { Sales adjustments } \
\hline 1 \text { Transferor } & * & * \
\hline 2 \text { Factor } & & * \
\hline \text { Transferor } & & * \
\hline \text { 3 Factor } & * & \
\hline \text { Transferor } & * & \
\hline \text { 4 Factor } & * & \
\hline
\end{array}$$

Quizplus · Accepted Answer

In a factoring arrangement with recourse, the transferor (the original holder of the accounts receivable) retains the risk of bad debts and sales adjustments, meaning they bear the cost if the receivables are not collected.

In a Factoring of Accounts Receivable with Recourse,which Party Bears