27 November 2013
Transfer pricing is a mechanism for evaluating the efficiency of operations of various segments of a business. It also serves the purpose of record keeping and managing operations. It is the price one segment, division, or department is charged for obtaining goods or services of another segment or department of the same company. Usually there is no actual payment of money, only accounting records are made, so that the selling department can see how much it earned and the buying department can see how much it spent. Management can use the records to evaluate how efficiently the departments are operating.
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