The factoring of accounts receivable consists of:
A) selling accounts receivable at a profit.
B) pledging accounts receivable as collateral for a loan.
C) selling accounts receivable to raise working capital.
D) buying accounts receivable from a factor.

Question

Quizplus · Accepted Answer

The factoring of accounts receivable involves selling accounts receivable to a third party, usually a factor, at a discount in exchange for immediate cash. This helps raise working capital for the business. Therefore, option C is the correct choice. Options A, B and D do not accurately describe the process of factoring accounts receivable.

The Factoring of Accounts Receivable Consists Of