Final answer:
Transfer pricing is related to the pricing of transactions between divisions of the same company and is important in both accounting and tax compliance.
Step-by-step explanation:
True. Transfer pricing is indeed a term that applies to transactions between different divisions or units of the same company.
It refers to the rules and methods for pricing transactions within and between enterprises under common ownership or control.
Because of its impact on the allocation of resources among parts of the company, and its effect on the financial statements and taxes, transfer pricing is a significant issue in both managerial accounting and tax compliance.
False.
Transfer pricing is a term that applies to transactions between different divisions or units of the same company. It is commonly used in multinational companies to determine the price at which goods, services, or intangible assets are transferred between different subsidiaries or divisions within the same company.
The purpose of transfer pricing is to ensure that the transactions are conducted at fair market value, as if they were conducted between independent parties.