When factoring accounts receivables, the "factor" is the _____.
A) negotiated accounts receivable account.
B) the percent deduction in payment to the firm.
C) the financial institution that buys the accounts receivable.
D) the method of determining how much money is lent to the firm.

Question

Quizplus · Accepted Answer

The factor in factoring accounts receivable refers to the financial institution or company that purchases the accounts receivable from the firm. They provide funds to the firm in exchange for the right to collect payment from the customers who owe the receivables. The percent deduction in payment to the firm is a fee or commission charged by the factor for their services, but it is not the factor itself. The negotiated accounts receivable account and the method of determining how much money is lent to the firm are not directly related to the concept of factoring.

When Factoring Accounts Receivables, the "Factor" Is the _____