Which term refers to the price one part of a company charges for products and services it provides to another part of the same company?

• A. Bearer share
• B. Transfer price
• C. Registered share
• D. Democratic rule

Answer: (B)

Transfer price is the price charged for goods or services sold between different parts of the same company. This internal pricing helps allocate revenue and costs to each division, enabling proper performance evaluation, budgeting, and profitability analysis by segment. In practice, the price is often guided by the arm’s length principle—setting it as if the transactions were between independent parties—to satisfy tax authorities and prevent profit shifting. The other terms refer to unrelated concepts: a bearer share is a stock owned by whoever holds the certificate, a registered share is recorded in the owner's name, and a democratic rule is not a corporate pricing term.