The Level of the Transfer Price Can Affect the Overall

question 7

Multiple Choice

The level of the transfer price can affect the overall company because

• A) the higher the transfer price, the higher the operating income.
• B) it may impact on the taxes paid by the multinational company.
• C) the lower the transfer price, the lower the total costs.
• D) internal transfers are always costly to the firm.
• E) the transfer price may be higher than the cost-based price.

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Definitions:

Extraordinary Item

Unusual and infrequent gains or losses that are reported separately in the financial statements to give a clearer picture of a company's ongoing performance.

Income Reporting

The process of communicating the income generated by a business over a specific period, typically through financial statements like income statements.

Earnings Per Share

A key financial indicator calculated by dividing the net income by the number of outstanding shares of a company's stock.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenues.