Question

Brustle's Pottery either factors or assigns all of its receivables to other firms. This is known as: a. capital financing. b. accounts receivable financing. c. pledged financing. d. capital funding. e. daily funding.

Answer 1

Answer:

Accounts receivable financing

Explanation:

The accounts receivables are used as a collateral to receive a loan from the bank or factor. The amount received are deducted from the loan assigned and the remainder are paid back to the firms. The interest rate is agreed between the factor and firm using invoice discounting. Whereas the factoring is the assigning of the responsibility of accounts receivables management to the other organization. So both of these are the ways through which accounts receivables are used to finance the company's working capital or long term projects.