Which of the Following Statements About Geographical Adjustments to Price

question 381

Multiple Choice

Which of the following statements about geographical adjustments to price is most accurate?

• A) In FOB origin pricing, the seller selects the mode of transportation.
• B) In FOB with freight-allowed pricing, the seller passes on all transportation costs to the buyer.
• C) Multiple-zone pricing is sometimes referred to as "spider web" pricing.
• D) Basing point pricing has been used in industries where freight expenses are a significant part of the total cost to the buyer and products are largely undifferentiated.
• E) Geographical adjustments can be subject to government regulation if the firm cannot supply objective data (lists of mountains, rivers, weather conditions, etc.) explaining why those adjustments need to be made.

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Definitions:

Acquisition Method

An accounting procedure for recording the purchase of one company by another, focusing on fair value assessments of acquired assets and liabilities.

Subsidiary Shares

Subsidiary shares are equity shares held by a parent company in a subsidiary company, giving it ownership interest.

Selling Price

The amount of money a buyer pays to purchase an item or service from a seller.

Initial Value Method

An accounting method in which an investment is initially recorded at cost, with subsequent changes in value not typically recognized.