Which of the following creates a secured short-term loan with accounts receivable?
A) lines of credit
B) commercial paper
C) pledge of accounts receivable
D) factoring of accounts receivable

Question

Quizplus · Accepted Answer

Pledge of accounts receivable involves securing a loan against accounts receivable by pledging them as collateral. This creates a secured short-term loan as the lender has a claim on the accounts receivable in case of default by the borrower. Lines of credit and commercial paper are not secured by accounts receivable, while factoring of accounts receivable involves selling them to a third party for a discounted price and not creating a loan.

Which of the Following Creates a Secured Short-Term Loan with Accounts