The Primary Objective in Setting Transfer Prices Is to ________

question 213

Multiple Choice

The primary objective in setting transfer prices is to ________.

• A) establish a system that determines the best transfer prices for the company as a whole
• B) evaluate the managers of the responsibility centers involved
• C) achieve goal congruence by selecting a price that will maximize overall company profits
• D) make it easy for managers to select prices that maximize division profits

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Definitions:

Debit

A bookkeeping record that leads to a rise in a company's assets or a fall in its liabilities on the balance sheet.

Debits

Accounting entries that increase an asset or expense account, or decrease a liability or equity account, recorded on the left side of an accounting ledger.

Account Receivable

The amount customers are required to pay a company for products or services received but for which payment has not yet been made.

Total Assets

Total assets represent the sum of all assets owned by an entity, including both current and non-current assets, indicating the total resources available to the entity.