Q25RQ - Horngren'S Financial And Managerial Accounting

Question

What is a transfer price?

Step-by-Step Solution

Answer

Answer

Transfer price is the consideration amount paid by one unit of an organization to another unit.

Step 1: Meaning of Managerial Accounting

Managerial accounting is the branch of accounting that focuses on capturing the internal information of the business entities and communicates the same with the managers to draft policies, strategies, and decisions.

Step 2: Meaning of transfer price

The term transfer price denotes the transfer price paid from the organization’s one department to another for goods and services. Such other units can be in the same country or other countries.