If a company sells its accounts receivables to a factor
A) the seller pays a commission to the factor.
B) the factor pays a commission to the seller.
C) there is a gain on the sale of the receivables.
D) the seller defers recognition of sales revenue until the account is collected.

Question

Quizplus · Accepted Answer

When a company sells its accounts receivables to a factor, the seller typically pays a commission to the factor for this service. The factor then takes on the responsibility of collecting the receivables.

If a Company Sells Its Accounts Receivables to a Factor