Question

Gar Co. factored its receivables without recourse with Ross Bank. Gar received cash as a result of this transaction, which is best described as a:
Multiple Choice
a. Loan from Ross collateralized by Gar’s accounts receivable.
b. Loan from Ross to be repaid by the proceeds from Gar’s accounts receivables.
c. Sale of Gar’s accounts receivable to Ross, with the risk of uncollectible accounts transferred to Ross.
d. Sale of Gar’s accounts receivable to Ross, with the risk of uncollectible accounts retained by Gar.

Answer 1

Answer:

Answer for the following statement is "C"

Explanation:

• Sale of Gar's receivable accounts to Ross, with the possibility of noncollectable accounts being passed to Ross.

• Non-recourse factoring helps a corporation to offer its invoices to a component without any duty to accept unpaid invoices.

• If consumers refuse to pay their bills or pay their invoices late, all damages are borne by the element, making the company unregulated.