p33 - Cash and Receivables 7 - 9 40. Which of the following...

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Cash and Receivables 7 - 9 40. Which of the following is true when accounts receivable are factored without recourse? a. The transaction may be accounted for either as a secured borrowing or as a sale, depending upon the substance of the transaction. b. The receivables are used as collateral for a promissory note issued to the factor by the owner of the receivables. c. The factor assumes the risk of collectibility and absorbs any credit losses in collecting the receivables. d. The financing cost (interest expense) should be recognized ratably over the collection period of the receivables. S 41. Which of the following statements is incorrect regarding the classification of accounts and notes receivable? a. Segregation of the different types of receivables is required if they are material. b. Disclose any loss contingencies that exist on the receivables. c. Any discount or premium resulting from the determination of present value in notes receivable transactions is an asset or liability respectively. d. Valuation accounts should be appropriately offset against the proper receivable accounts.
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This note was uploaded on 11/03/2011 for the course ACCT 3223 taught by Professor Peck during the Spring '11 term at Texas State.

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p33 - Cash and Receivables 7 - 9 40. Which of the following...

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