Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 7 - Cash and Receivables - Review and Practice - Questions - Page 362: 17


A business entity might sell receivables because cash is tight and access to credit is prohibitively expensive or not available. Also, a business entity may have to sell its receivables, instead of borrowing, to avoid violating existing lending agreements.

Work Step by Step

In addition, the collection and billing of receivables are often costly and time-consuming.
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