The sale of receivables by a business
A)indicates that the business is in financial difficulty.
B)is generally the major revenue item on its income statement.
C)Increases costs relating to monitoring and collecting receivables.
D)can be a quick way to generate cash for operating needs.

Question

Quizplus · Accepted Answer

Selling receivables can provide a quick way to generate cash for operating needs, but it does not necessarily indicate financial difficulty. It may also reduce the costs of monitoring and collecting receivables since the buyer is responsible for those tasks. It is not typically a major revenue item on the income statement.

The Sale of Receivables by a Business