Switching Costs, in the Context of Technology Industries, Refer to the Costs

question 22

Multiple Choice

Switching costs, in the context of technology industries, refer to the costs that:

• A) industries have to incur in order to adhere to technical standards.
• B) companies have to incur to switch from one business model to another.
• C) customers need to bear to abandon an established standard and adopt a new standard.
• D) industries need to bear in order to abandon old technology and get license for a new technology.
• E) companies need to bear to create product differentiation when they are locked inside an industry.

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Definitions:

Sales Returns and Allowances

A reduction in the amount of sales that accounts for the return of goods by customers and allowances for unsatisfied goods or services.

Purchases Discount

An accounting reduction in the price paid for goods or services if payment is made within a specified period.

Unearned Revenue

A liability account that records amount owed for goods or services in advance of delivery. The Cash account would record the receipt of cash.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate period.