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20 April, 03:58

Ferule, Inc. factors its accounts receivable without recourse. The factoring is recorded as:

A) A secured borrowing.

B) Only note disclosure of the arrangement is required.

C) A sale.

D) None of these answer choices are correct

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Answers (1)
  1. 20 April, 04:10
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    The correct answer is letter "C": A sale.

    Explanation:

    Factoring with recourse implies a company selling unpaid accounts receivable to a third party. This is done so the firm can generate cash advances. The third party, called the factoring company, takes care of the collection of the debt charging the firm a commission based on each invoice collected.

    When a firm sells its account receivables to a factoring company, the firm records the transaction as a sale.
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Home » Business » Ferule, Inc. factors its accounts receivable without recourse. The factoring is recorded as: A) A secured borrowing. B) Only note disclosure of the arrangement is required. C) A sale. D) None of these answer choices are correct
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