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Homework answers / question archive / Cleating new financial instruments backed with various types of Accounts Receivable is called _____
Cleating new financial instruments backed with various types of Accounts Receivable is called _____.
a. factoring
b. pledging
c. selling
d. securitizing
The answer is a. factoring.
Factoring is the sale of accounts receivable into a factor (financing entity). The entity recognized a gain or loss on the difference of the proceeds received and the net carrying amount of accounts receivables factored. The factor assumes responsibility for uncollectible factored accounts.
