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: 18


A company might sell receivables because: 1. The company is tight on money and access to normal credit is not available or 2. Access to credit is prohibitively expensive. 3. A company may have to sell its receivables, instead of borrowing, to avoid violating existing lending arrangements.

Work Step by Step

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