The Price Used to Sell Goods or Services Between Subsidiaries

question 49

Multiple Choice

The price used to sell goods or services between subsidiaries in a company is

• A)the tax avoidance price.
• B)set at the marginal cost of the producing subsidiary.
• C)determined by the minimum of the average cost curve.
• D)a transfer price.

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Definitions:

Interim Financial Statement

Financial reports covering a period of less than one full fiscal year, providing a snapshot of a company's financial position during the year.

LIFO Liquidations

The process of using older inventory costs in the cost of goods sold, which can artificially increase profit margins during times of inflation but can also lead to inventory shortages.

Operating Segment

A component of a business that engages in business activities from which it may earn revenues and incur expenses, and for which separate financial information is available.

U.S. GAAP

United States Generally Accepted Accounting Principles, a set of rules and guidelines meant to ensure financial reporting consistency and transparency.