All of the Following Are True of Market-Based Transfer Prices

question 105

Multiple Choice

All of the following are true of market-based transfer prices except:

• A) They generally motivate the correct economic decision.
• B) They can be determined for all goods and services transferred internally.
• C) They may lead to goods and services purchased externally by the purchasing unit.
• D) To the extent they exist, they are objective.
• E) They provide an independent valuation for internal transfers.

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Definitions:

Exchange Rate

The value of one currency for the purpose of conversion to another, indicating how much of one currency can be exchanged for another.

Euro

The official currency of 19 of the 27 member states of the European Union.

Purchase

The act of buying goods or services.

Transactions

Financial activities involving the exchange of goods, services, or funds between two or more parties.