Oneal Carries on a Wholesale Toy Distribution Business

Multiple Choice

Oneal carries on a wholesale toy distribution business.He sells to his customers on credit, giving them 30 days to pay.Oneal is negotiating for an operating line of credit and his bank has asked him to assign his receivables to them as security for his obligations under the line of credit.Assuming that Oneal agrees to the assignment, which of the following is TRUE?

A) Oneal's customers will not be happy because they will have to pay their accounts to the bank.
B) If Oneal's receivables are more than the amount of the loan, the bank will be entitled to the surplus.
C) Oneal will be permitted to continue to collect his own receivables and carry on his business as usual, unless he defaults on his loan and the bank exercises its rights pursuant to the assignment agreement.
D) Oneal will not have to collect his receivables himself.
E) If Oneal defaults under the operating line of credit, his customers will not have to pay what they owe him.