A Probability Based on Logical Analysis Rather Than on Observation

question 13

Multiple Choice

A probability based on logical analysis rather than on observation or personal judgment is best referred to as a(n) _______________.

• A) a priori probability.
• B) empirical probability.
• C) subjective probability.
• D) None of the above.

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Definitions:

Transfer Price Approach

A method used for pricing transactions between affiliated companies or divisions within the same larger corporate entity.

Standard Cost Approach

A costing method that assigns a fixed cost to inventory and cost of goods sold, based on standard estimates of input costs.

Market Price Approach

An approach to transfer pricing that uses the price at which the product or service transferred could be sold to outside buyers as the transfer price.

Decentralization

The distribution of decision-making power and assignment of management and operational duties away from a central authoritative location or group.