Answer the following statements true (T) or false (F)
1) Factoring is an option available to a business to reduce the risk of uncollectible accounts receivable.
2) When a business pledges its accounts receivable, it transfers the right to collect cash from customers to the bank.
3) The expense associated with the cost of uncollectible accounts receivable is called bad debts expense.
4) Accounts receivable that are uncollectible must remain on the books because the customer may eventually pay.
5) Bad debt expense is a cost to the seller of extending credit.
1) TRUE
2) FALSE
3) TRUE
4) FALSE - Accounts receivable that are uncollectible must be written off because the company does not
expect to receive cash in the future.
5) TRUE
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