When accounts receivable are pledged as collateral for a loan:
A)title to the receivables is transferred to the lender.
B)the borrower's customers are usually notified of the pledging arrangement.
C)the lender assumes the default risk on the receivables.
D)b and c.
E)None of the above

Question

Quizplus · Accepted Answer

When accounts receivable are pledged as collateral for a loan, title to the receivables is not transferred to the lender, the borrower's customers are not usually notified, and the lender does not assume the default risk on the receivables. The borrower retains ownership and the risk of default.

When Accounts Receivable Are Pledged as Collateral for a Loan