Which of the following is the major risk associated with receivables?
A)they may be sold to a bank with recourse.
B)they may be recorded as long-term when in fact they will be realized in the current period.
C)they will not be realized for the entire amount due.
D)they are pledged as collateral as disclosed in the footnotes to financial statements.

Question

Quizplus · Accepted Answer

The major risk associated with receivables is that they may not be realized for the full amount due. This can happen if customers fail to pay their debts or if they default on their payments. This risk is called credit risk or default risk, and it is a significant concern for companies that rely heavily on receivables to fund their operations. Options A, B, and D do not accurately reflect the major risk associated with receivables.

Which of the Following Is the Major Risk Associated with Receivables