A ________ agreement normally states the exact conditions and procedures for the purchase of an account.
A) factoring
B) pledging accounts receivable
C) revolving credit
D) line of credit

Question

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Factoring is a financing arrangement where a company sells its accounts receivable (invoices) to a third party (factor) at a discount. A factoring agreement would therefore specify the conditions and procedures for the purchase of those accounts receivable. Pledging accounts receivable and revolving credit are also financing arrangements, but they do not involve the purchase of accounts receivable specifically. A line of credit is a general financing arrangement that provides access to funds for a variety of purposes, and does not necessarily involve the purchase of accounts receivable.

A ________ Agreement Normally States the Exact Conditions and Procedures