The Internet Has Made Transactions Between Businesses (B2B Trading) Fast

question 6

Multiple Choice

The Internet has made transactions between businesses (B2B trading) fast and easy. Any business in any location can access specialized knowledge, labor, and materials. It is likely that these virtual economic communities will result in

• A) consolidation of industries into a small number of powerful firms.
• B) internal economies of scale.
• C) suppression of innovations and collusive behavior, driving up prices.
• D) government intervention and regulation.
• E) external economies of scale.

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Definitions:

Allowance Method

A method of accounting for bad debts that involves estimating and recording uncollectible accounts receivable as an expense.

Write-Off

An accounting action whereby the value of a bad debt or an asset is reduced to zero, acknowledging it as a loss.

Average Collection Period

The average time it takes for a company to receive payments from its customers.

Accounts Receivable Turnover

A financial metric that measures how efficiently a company collects its receivables or the credit it extends to customers.