Discuss how accounts receivable and inventory can be used as collateral for short term securedloan.
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- When a receivable is written off under the allowance method, how does it affect the net realizable value shown on the balance sheet?The payment for the use of borrowed money is called: loan maturity value interest principalDifferentiate between the use of receivables in financing arrangements accountedfor as a secured borrowing and those accounted for as a sale.
- It is a receivable financing activity where the Entire Receivable's ownership is sold to the Factee Assigning Factoring Pledging DiscountingExplain the following terms: credit transfer, dishonoured cheque, standing orderand give examples, the purposes, advantages and disadvantagesWhich of the following is true when accounts receivable are factored without recourse? a. The transaction may be accounted for either as a secured borrowing or as a sale, depending upon the substance of the transaction. b. The financing cost (interest expense) should be recognized ratably over the collection period of the receivables. c. The receivables are used as collateral for a promissory note issued to the factor by the owner of the receivables. d. The factor assumes the risk of collectibility and absorbs any credit losses in collecting the receivables.
