Why Might a Company Use Barter Rather Than Money to Make

question 220

Multiple Choice

Why might a company use barter rather than money to make a trade?

• A) Barter trade is generally more efficient than money-based trade.
• B) Barter can enable two firms to trade when their cash flows are limited.
• C) Money requires a coincidence of wants; barter is more direct.
• D) Money is efficient only for large transactions, so barter is preferred for smaller transactions.

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Definitions:

Gross Profit

The difference between the revenue generated from selling goods or services and the cost of those goods sold, excluding other operating expenses.

Cost Of Goods Sold

The direct costs attributable to the production of goods sold by a company, including materials and labor, used in calculating gross profit.

Selling Expenses

Costs incurred directly and indirectly in making sales, including advertising, commissions, and shipping expenses.

Operating Expenses

Ongoing costs for running a business that do not include the cost of goods sold but can cover expenses such as rent, utilities, and salaries.