Which of the Following Statements Is Correct

Multiple Choice

Which of the following statements is correct?

A) The factoring of accounts receivable consists of a series of individual cycles as opposed to a continuous process.
B) Once a factoring agreement is in force, funds from this source are spontaneous in the sense that an increase in sales will automatically generate additional credit from the factor.
C) One of the main disadvantages of pledging or factoring is the significant lack of flexibility.
D) One disadvantage of factoring is that it reduces the need of the selling firm to maintain a credit department.
E) The cost of pledging and factoring generally is very low and the risk bearing fee is incorporated into the interest rate charged on the unpaid balance of the funds advanced by the factor, which is usually one half of
One percent above the prime rate.