Which of the Following Is Not an Example of an External

question 92

Multiple Choice

Which of the following is not an example of an external failure cost?

• A) Accepting company liability resulting from product failure.
• B) Experiencing decreasing sales as a result of poor-quality products.
• C) Repairing or replacing defective products after they've been sold.
• D) Testing products in use at the customer's site.

---

Definitions:

Transaction Costs

Incremental direct costs that are directly attributable to the acquisition, issue, or disposal of a financial asset or financial liability.

Revenue Recognition

An accounting principle that outlines the specific conditions under which revenue is recognized within the financial statements.

Consignment

An arrangement where goods are left in the possession of another party to sell, but the ownership remains with the supplier until sold.

Initial Deposit

The first amount of money placed into an account or investment.