Question

Which of the following is not a valid strategy for determining a transfer price?

a) Using the price set by GAAP
b) Using the market price
c) Using negotiated price
d) Using some definition of cost

Answer 1

The correct answer is a) Using the price set by GAAP. GAAP is not a valid strategy for determining a transfer price. Valid strategies include using the market price, negotiated price, or some definition of cost.The correct option is a.

Step-by-step explanation:

The correct answer is a) Using the price set by GAAP. GAAP stands for Generally Accepted Accounting Principles, which are a set of guidelines and standards used for financial reporting. While GAAP is important for accounting purposes, it is not a valid strategy for determining a transfer price. Transfer prices are the prices at which goods or services are transferred between different. business units within the same company. There are several valid strategies for determining a transfer price including using the market price, negotiating a price between the parties involved, and using some definition of cost.