Which of the Following Statements About Transfer Pricing Is True

question 21

Multiple Choice

Which of the following statements about transfer pricing is true?

• A)The higher the transfer price, the larger the gross profits of the transferring division relative to the receiving division.
• B)Very high markup policy used in the transfer pricing to a subsidiary makes the adjusted present value (APV) of that subsidiary's capital expenditure appear less attractive.
• C)Very low markup policy used in the transfer pricing to a subsidiary makes the adjusted present value (APV) of that subsidiary's capital expenditure appear less attractive.
• D)Both a and b

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Definitions:

Fluid Wave

A physical examination technique used to detect ascites, where a wave-like motion is felt when tapping on one side of the abdomen while the other side is compressed.

Ascites

The accumulation of fluid in the peritoneal cavity, causing abdominal swelling. Often associated with liver disease, such as cirrhosis.

Splenomegaly

An abnormal enlargement of the spleen, which can be caused by various diseases or conditions affecting the spleen's ability to filter blood.

Cholecystitis

Inflammation of the gallbladder, often caused by gallstones blocking the cystic duct, leading to pain, fever, and sometimes infection.