Cleating new financial instruments backed with various types of Accounts Receivable is called _____

Business Dec 10, 2020

Cleating new financial instruments backed with various types of Accounts Receivable is called _____.

a. factoring

b. pledging

c. selling

d. securitizing

Expert Solution

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.

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