Question

The sale of receivables by a business can be a quick way to generate cash for operating needs. is an indication that the business is owned by a factor. indicates that the business is in financial difficulty. is generally the major revenue item on its income statement.

Answer 1

Answer:

The question is not properly aligned,hence find below question:

The sale of receivables by a business

A. indicates that the business is in financial difficulty.

B. is generally the major revenue item on its income statement.

C. is an indication that the business is owned by a factor.

D. can be a quick way to generate cash for operating needs.

The correct option is D,can be a quick way to generate cash for operating needs.

Explanation:

Factoring receivable relates to selling off company's account receivables in exchange for a reduced amount of quick cash and not necessarily a pointer to financial difficulty since an investment opportunity could be the rationale for such factoring.

Also,factoring is not major revenue item in the income statement except the company in question is a business whose mainstream business is buy accounts receivable from other companies.

The fact that a debt is sold to a factor does translate to factor owning the business as the factor is a just business partner.