If a nonfinancial company securitizes its accounts

Ans:B.
The securitization of accounts receivables for less than book value would result in a loss on the income statement, but an increase in the cash from operations, reflecting the proceeds received.
A is incorrect. If a nonfinancial company securitizes its accounts receivables for more than their book value, the company can recognize a gain. But GAAP is silent on where the gains from securitizations should be reported in the income statement. Some firms take a more aggressive approach and include the gains as revenue (thus increase net income). Other firms reduce operating expenses by the amount of the gains. Some firms report the gains as a part of nonoperating income.
C is incorrect. Firms can convert AR to cash by borrowing against the receivables or by selling or securitizing the receivables. When a firm borrows with its receivables as collateral, the inflow of cash is reported as a financing activity in the cash flow statement.