Factoring" occurs when a business sells some of its accounts receivable to another insitution so it can receive cash immediately instead of having to wait until the receivables can be collected. True or False

Factoring" occurs when a business sells some of its accounts receivable to another insitution so it can receive cash immediately instead of having to wait until the receivables can be collected. True or False

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: How can the company reduce the level of uncollectible accounts and increase the likelihood that…

A: Uncollectible accounts are those accounts of accounts receivables on which amount due can not be…

Q: Which one of the following statements is true if a company's collection period for accounts…

A: Collection period of accounts receivable means the time gap between selling of goods on credit and…

Q: Bad debt recovered is a payment received from account receivable from s client or customer whose…

A: Bad debts expense is charged when it is expected that payments from accounts receivables would not…

Q: On a ban reconcialiation, customer's checks that are returned for lack of funds would be a.…

A: PLEASE LIKE THE ANSWER CORRECT ANSWER IS "a" i.e., deducted from the balance per company records

Q: hy can not we wait to record transactions until the cash comes in or the cash goes out?

A: Accrual system of accounting says that every thing which is accrued has to be provided in books of…

Q: Cash received from loans is a deposit other than customer payments. Group of answer choices True…

A: Cash received from the loan is considered as the current liabilities with the name of deposits.

Q: Which statement is false? a. The amount of Accounts Receivable pledged should be excluded from…

A: Accounts receivables:-Accounts receivables includes the balance which is due to firm on the goods…

Q: If a company debits Cash and credits Sales Revenue, it is recording the.

A: Real accounts are those assets and liabbilties whose balance is carried forward from one accounting…

Q: What account to credit if the customer’s notes receivable become delinquent and was not previously…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Accounting for Receivables is very important for any Business. Explain the methods used to initiate…

A: The accounts receivable arise when the company makes sales on account. The company generally makes…

Q: How can Notes Receivables be sold to another party? What is the process exactly? Please explain.

A: Notes receivables are current assets of a company. Many companies sell their products or services on…

Q: Explain why speeding up the collection of accounts receiv-able provides only a one-time increase in…

A: Fast-moving up the collection of accounts receivable will not increase the total amount collected.

Q: The companies dispose their accounts receivable because _____________ a. of shortage of accounting…

A: Business might sell their receivable accounts if they need to make money quickly, increase cash…

Q: What is the difference between a bank feed transaction and a manually entered transaction in…

A: In QuickBooks Online, a bank feed transaction refers to the financial transactions that are imported…

Q: f an accountant mistakenly uses the General journal to record a payment of cash for a bill that is…

Q: A Credit Note would be issued by a business: A. as evidence of goods sold on credit. B. as reference…

A: Accounting refers to the process of recording, summarizing, interpretation the financial information…

Q: What are some simple ways that a small business can shorten the Accounts Receivable (A/R) cycle?

A: Account receivable refers to the amount that the business organization recovers from its customers.…

Q: s loans money to another party or sells goods or services to another party on account or has…

A: The right answer is all the above

Q: When an uncollectible account is recovered after it has been written off, which of the following…

A: When an uncollectible account is recovered after it has been written off, allowance for doubtful…

Q: Promissory notes are not used

A: Option a is wrong because when the business borrows money, promissory note can be issued to the…

Q: a. At the stage of recording a credit sale transaction, please state the potential misstatements 3)…

A: “Since you have asked multiple sub-parts, we will solve the first three sub-parts for you. If you…

Q: pense and accounts receivable balance. Under different circumstances, another method is used called…

A: When there is only one large accounts receivable due from one client the direct write off method if…

Q: en a company adjusts its accounts receivable balance downward due to potential uncollectible…

A: Accounts receivable is an amount that is to be received by a company from an individual or a…

Q: Why should a company have clear strategy for collecting Accounts receivable from its customers? For…

A: STEP 1 In a general sense companies have a clear strategy which is predetermined but it subject to…

Q: Which one of the following statements is NOT true about account receivables? Select one: a. Account…

A: Accounts receivable: if sale is made on cash the supplier immediately collects the cash and no…

Q: Is this true or false? When recording a cash transaction from a client for a service that will be…

A: Unearned revenue is a liability for which services are yet to be provided in the near future.

Q: Which of the following is/are a sign that a company cannot quickly turn its receivables into cash…

A: Ratio analysis involves analyzing and comparing various line item data from various financial…

Q: What kind of business would have a short duration of receivables collection?

A: The low collection time is typically more appealing than the long collecting period. The fact that…

Q: Which of the following describes one of the differences between a debit card and a prepaid card? O…

A: Debit Card It is a payment card issued by the bank that deducts money directly from the consumer's…

Q: The allowance method for uncollectible accounts a. Is required by Generally Accepted Accounting…

Q: Question: Why does a company's cash at Bank account and bank statement rarely match? reqiured:…

A: The bank reconciliation statement is the statement that reconciles the difference between the bank…

Q: Public companies are required to use the Allowance Method to account for uncollectible Accounts…

A: From an investor's perspective, the Allowance Method is beneficial because it provides a more…

Q: 1.    When using the Allowance method to account for uncollectible accounts, between…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: A. What is a bank reconciliation and why is it important for companies to do it periodically?

A: Balance per bank Add : Undeposited collections Total Deduct : Outstanding checks Check No. x…

Q: Discuss the best reason(s) for using the allowance method and give some examples of companies that…

A: The reasons for using the Allowance method are discussed hereunder : There are two methods to…

Q: Graves Construction is journalizing two transactions related to uncollectible accounts. The first…

A: Accounts receivables are those customer accounts to whom credit sales has been made on account,but…

Q: When a business factors its accounts receivables, the business O no longer has to deal with the…

A: Solution:- Factoring is a concept in which the business sells its debtors to a third party, known as…

Q: able. b. What steps should be taken by a business to reduce/eliminate excessive inventory? Explain…

A: A cash on delivery (COD) transaction occurs when the recipient pays for an item in cash rather than…

Q: Direction: Read the statements carefully. Write TRUE if the statement is correct. Otherwise, write…

A: Because you have asked question with multiple parts (MULTI PART) , we will solve the first 3 parts…

Question

"Factoring" occurs when a business sells some of its accounts receivable to another insitution so it can receive cash immediately instead of having to wait until the receivables can be collected.

True or False

Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The revenue recognition principle requires that revenues always be recorded when cash is received. True or False True False
Accounting If cash collected from customers is not yet recorded as revenue, what happens to it?
The companies dispose their accounts receivables due to a. Shortage of accounting staff b. Billing and collection expense are costly c. There are other ways to earn cash d. The accounts receivable are all good
4. PROBLEM 3-6 In-Transit Items LO 8 On July 31, 2019, Ping Company purchased 90% of Santos Company's common stock for $2,010,000 cash. Immediately after the acquisition, the two companies' balance sheets were as follows: Ping $ 320,000 S 150,000 Santos Cash Accounts receivable 600,000 300,000 Note receivable 100,000 -0- Inventory 1,840,000 400,000 Advance to Santos Company Investment in Santos Company 2,010,000 60,000 -0- -0- Plant and equipment (net) 3,000,000 1,500,000 Land 90.000 90,000 Total $8,020,000 $2,440,000 $ 800,000 S 140,000 100,000 Accounts payable Notes payable Common stock 900,000 2,400,000 900,000 680,000 620,000 $8,020,000 $2,440,000 Other contributed capital 2,200,000 Retained earnings 1,720,000 Total Santos Company has not yet recorded the $60,000 cash advance from Ping Company. Ping Company's accounts receivable include $20,000 due from Santos Company Santos Company's $100,000 note payable is payable to Ping Company Neither company has recorded $7,000 of interest…
Discounting is a transfer or endorsement of a promissory note by the payee in favor of another party usually a bank where the payee becomes the endorsee TRUE OR FALSE
Advantages and disadvantages of accepting debit and credit card transactions as opposed to accepting personal Cheques from customers? (Consider both internal control and business reasons)
Which of the following transactions leaves a bank's total asset and liability unchanged? A bank receives deposits from a customer in the form of cash. O A bank writes off a bad loan it made to a local business. O A bank pays out cash to a customer who wants to withdraw money from his checking account. A bank makes a consumer loan with its cash reserves.
At the time companies write off accounts receivable, there is no effect on net income. true or false
3.-The objective of accounts receivable management is to collect receivables as soon as possible without losing sales by applying high-pressure collection techniques. True or false?
What is the primary reason why most businesses want to sell on a credit basis if it is preferable for sellers to collect advance payments from customers and/or accept cash transactions only? Give and explain a credit/collection-related task of (a) credit manager and (b) collections manager.
Trade receivables include employee advances. occur when two companies trade or exchange notes receivables. can be accounts receivable or notes receivable. do not result from the operations of the business.
Which of the following is/are a sign that a company can quickly turn its receivables into cash (may have more than one answer)? Check All That Apply a)A high average collection period. b)A low average collection period. c)A low receivables turnover ratio. d)A high receivables turnover ratio.