Answer the following statements true (T) or false (F)
1) When businesses accept payment by credit and debit cards, the costs of processing fees are greater than the benefits of transferring the risk of not being able to collect from the customer and avoiding the costs associated with credit customers.
2) Credit cards reduce the customer's bank account immediately but allow the customer to pay electronically instead of with currency or writing a check.
3) Factoring occurs when a business sells its receivables to a finance company or bank.
4) When a business factors its receivables, it uses the receivables as security for a loan.
5) When a business factors its receivables, the factor collects cash on the receivables.
1) FALSE - When businesses accept payment by credit and debit cards, the benefits of transferring the
risk of not being able to collect from the customer and avoiding the costs associated with credit customers
are greater than the costs of processing fees.
2) FALSE - Debit cards reduce the customer's bank account immediately but allow the customer to pay
electronically instead of with currency or writing a check.
3) TRUE
4) FALSE - When a business pledges its receivables, it uses the receivables as security for a loan.
5) TRUE
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