Which of the following best describes the agreement where a firm sells receivables to a lender and the lender agrees to pay the firm the amount due from its customers at the end of the firm's payment period, with the provision that the lender will receive payment from the borrower if the customers default on their payments?

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The description provided matches the definition of factoring of accounts receivable with recourse. In this agreement, the lender (factor) pays the firm (borrower) the amount due from its customers at the end of the payment period, but the factor has the right to collect payment from the borrower if the customers default on their payments. Choice A, trust receipt, refers to a type of credit agreement in which a borrower pledges inventory or goods as collateral for a loan. Choice B, pledging of accounts receivable, involves a borrower using accounts receivable as security for a loan, but the borrower retains ownership of the receivables. Choice D, factoring of accounts receivable without recourse, is similar to choice C, but in this case, the lender assumes the risk of non-payment by the customers and cannot demand payment from the borrower if the customers default.

Which of the Following Best Describes the Agreement Where a Firm