Ok, so I think the clue to this is in the phrasing of the question, i.e. ‘had the securitized receivables been held on the balance sheet …’
In my opinion, you need to be comparing two scenarios, both involving securitization, but in one case the company derecognises the receivables (from its balance sheet), and in the other, it does not do so. Obviously there are rules regarding when it can and when it can’t do this, and these are discussed under Reading 19.
In the first case (receivables get derecognised): Receivables go down and Cash appears (and possibly, if the two are not equal, some profit or loss on the transaction that goes to the income statement and ultimately to equity)
In the second case (receivables remain on the balance sheet): Cash from the sale appears but receivables do not get recognised. Instead the company must record a Liability in its balance sheet (as if it borrowed money against the receivables). You will find a description of this process starting on pg 171 of the FRA book, with a nice quote from the financial statements of Fiat, concerning the precise naming of the liability in question (the one that must appear in the balance sheet to offset the appearance of cash and the fact that receivables do not get derecognised):
a corresponding financial liability is recorded in the consolidated balance sheet as “Asset-backed financing.” Gains and losses relating to the sale of such assets are not recognised until the assets are removed from the Group balance sheet
So, back to question 17 on pg 402, if the securitized receivables had indeed been held on the balance sheet, then liabilities would have gone up!
This is the only plausible explanation I see right now, although I admit the way the question is phrased may be confusing.