When Company A is selling receivables for Company B, the reason of selling receivables might be A Billing/collection are time-consuming and costly B

Accounting Jan 18, 2021

When Company A is selling receivables for Company B, the reason of selling receivables might be A Billing/collection are time-consuming and costly B. All of the answers are correct C. To avoid violating existing lending agreements D. To accelerate the collection of cash

Expert Solution

Basic reason for selling receivables to another company is to have Improved immediate cash flow for business.

Hence answer is Option D)

Other options are not the reasons for selling receivables. Some of the other reasons a company might expect while seling its receivables is to fullfill any large import orders or to fund a specific project etc.

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