Transfer Prices Do Not Affect Managers Whose Compensation Is Directly

question 84

True/False

Transfer prices do not affect managers whose compensation is directly dependent on an organization's operating income because transfer prices affect only divisional profits and not the organization's profit.

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Definitions:

Worksheet Income Statement

is a financial statement that preliminarily combines income and expenses data in worksheet form to calculate net income or loss.

Normal Balance

The part of an account (either debit or credit) that is used to log increments in the account's value.

Financial Statement

A formal record of the financial activities and position of a business, individual, or other entity, including balance sheets, income statements, and statements of cash flows.

Permanent/Temporary

Refers to accounts or methods in accounting that either endure indefinitely (permanent) or have an expiration or closing time (temporary).