Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

Assigning or pledging accounts receivable is used in a:

secured borrowing arrangement

factoring arrangement with recourse

direct write-off method

sale of receivables without recourse

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Verified step by step guidance

Understand the concept of 'assigning or pledging accounts receivable': This refers to using accounts receivable as collateral for a loan. The company retains ownership of the receivables but pledges them to secure borrowing.

Review the term 'secured borrowing arrangement': In this arrangement, the company borrows money and uses its accounts receivable as collateral. The lender has a claim on the receivables if the borrower defaults.

Compare 'secured borrowing arrangement' with other options: Factoring arrangements involve selling receivables, either with or without recourse. The direct write-off method is unrelated, as it pertains to bad debt accounting.

Eliminate incorrect options: Since assigning or pledging accounts receivable involves retaining ownership and using receivables as collateral, it does not align with factoring arrangements or the direct write-off method.

Conclude that assigning or pledging accounts receivable is used in a secured borrowing arrangement, as this matches the definition and purpose of the process.