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vlabodo [156]
3 years ago
13

If a company adopts an accounts receivable factoring program, and accounts for the factoring as a sale of receivables, which of

the following is true in the period the company starts the program (all else equal)? A. The factoring arrangement needs to be with a consolidated entity to qualify for sale accounting. B. The accounts receivable balance will increase. C. Cash flow from operations may increase. D. A retroactive restatement is necessary due to a change in accounting principle.
Business
1 answer:
horsena [70]3 years ago
4 0

Answer:C. cash flow from operations may increase

Explanation:

A factoring system is one in which a firm sell his right to receive payments on it's receivable to a firm referred to as the factor as a discount in which the amount of discount represents the factor fees for taking up the risk.

The factor may be with or without recourse to the firm selling the receivable.

It's mostly entered into to reduce payment defaults and increase inflow of cash for operations.

The factor company does not need to be a consolidated company,it usually reduce the receivable and does not require a change in accounting principles.

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David Nason purchased a recreational vehicle for $25,000. David went to City Bank to finance the purchase. The bank required tha
Degger [83]

Answer:

a) $22,500

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Explanation:

a) ammount financed: principal less down payment

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3 years ago
In her first few weeks at the marketing division of Rolland Retails, Judith Cox realized that Joshua, Doug, and Carl were closer
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Answer:

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in-group

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3 years ago
All the members of the sales team at Arkema are new hires. The team members need to work together to ensure that clients' requir
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Answer:

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Explanation:

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Happy Helpers Maid Service is calculating its standard direct labor rate. The direct labor rate is $19 per hour. Happy Helpers i
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Answer:

$24.28

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