The Test Indicating That the Profit on an Intragroup Business

question 23

Multiple Choice

The test indicating that the profit on an intragroup business transaction has been realised is:

• A) the involvement of an external party.
• B) the generation of profit from the transaction.
• C) whether or not a profit or loss occurred as a result of the transaction.
• D) the presence of only entities within the group as parties to the transaction.

---

Definitions:

Bad Debt Expense

An expense recognized when receivables are no longer collectible due to customer default.

Prompt Payment

A term describing the timely processing of payment to a vendor or creditor, often governed by contractual terms or regulations to ensure payments are made within an agreed-upon timeframe.

Accounts Receivable Turnover

A financial metric used to measure how efficiently a company collects revenue from its credit sales, calculated by dividing net credit sales by the average accounts receivable.

Average Collection Period

The mean period required for a company to get payment from its clients.