CFA Practice Question

There are 90 practice questions for this study session.

CFA Practice Question

Which statement(s) is (are) true?

I. Cash provided from outright sales of accounts receivable, whether to a factor or through a securitization agreement, is reported as operating cash flow.
II. Cash provided from outright sales of accounts receivable to a factor is reported as financing cash flow.
III. Cash provided from outright sales of accounts receivable through a securitization agreement is reported as financing cash flow.
Correct Answer: I

Such operating cash flow is effectively borrowed from a future reporting period and is not sustainable.

User Contributed Comments 2

User Comment
ehc0791 I is correct. For reporting purpose, factoring and securitizing are CFO, but for analytical purpose, factoring with recourse should be reclassified as CFF.
Lavay GAAP sees any A/R sale thru securitization or otherwise an outright sales, and proceeds should be under CFO.
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