Which Statement Is True Concerning External Failure Costs

question 25

Multiple Choice

Which statement is true concerning external failure costs?

• A)External failure costs are incurred to prevent defects in the products or services being produced.
• B)External failure costs are incurred to detect individual units of products that do not conform to specifications.
• C)External failure costs are incurred when the firm discovers nonconforming products and services before delivery to customers.
• D)External failure costs are incurred when the customers discover nonconforming products and services at delivery.

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Definitions:

Statement Of Cash Flows

A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and profit or loss.

Statement Of Owner's Equity

A financial document showing changes in the equity of a company due to contributed capital, earnings, and withdrawals over a period.

Administrative Expenses

Overhead costs not directly tied to a specific function such as manufacturing, production, or sales, including salaries of senior executives, costs of general services, and office rents.