To Minimize the Threat of Substitute Products or Services,some Businesses

question 137

Multiple Choice

To minimize the threat of substitute products or services,some businesses will create switching costs.What are switching costs?

• A)The start-up costs incurred when replacing old technology with new
• B)The costs incurred due to the inability to switch back to your first brand after moving to an alternative brand
• C)A non-refundable fine levied against the customer for switching to a competitor
• D)The costs that make customers reluctant to another project or service supplier

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Definitions:

Prepaid Item

An expense paid in advance before receiving the benefit of the service or good.

Accrued Liability

A financial obligation that a company has incurred but has not yet paid out or recorded in its financial statements.

Accrual Basis

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash is received or paid.

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid out.