Asked by Rebekah Gonzalez on Apr 27, 2024
Verified
Which of the following is the best definition of trust receipt?
A) An instrument acknowledging that the borrower holds certain goods in trust for the lender.
B) Short-term financing in which the factor purchases all of a firm's receivables and forwards the proceeds to the seller as soon as they are collected.
C) The time period between the acquisition of inventory and when cash is collected from receivables.
D) Loan negotiated with banks for day-to-day operations.
E) Costs that fall with increases in the level of investment in current assets.
Trust Receipt
A document issued by a bank to a buyer who has obtained a loan to purchase goods, wherein the buyer agrees to hold the goods in trust for the bank until the loan is repaid.
Short-Term Financing
Funding obtained for a period typically less than a year, used to cover immediate financial needs of a business.
Acquisition Of Inventory
The process a business undertakes to obtain supplies or products that it intends to sell to its customers.
- Gain insight into the idea of accounts receivable financing and its influence on business processes.
Verified Answer
ZK
Zybrea KnightMay 02, 2024
Final Answer :
A
Explanation :
A trust receipt is a document that acknowledges that the borrower is holding specific goods or inventory in trust for the lender until the loan associated with those goods is paid.
Learning Objectives
- Gain insight into the idea of accounts receivable financing and its influence on business processes.