The statement "when electrons are transferred between two atoms a covalent bond is formed" is incorrect. Covalent bonds are formed when atoms share electrons, not when they transfer them. For example, when two hydrogen atoms form a covalent bond, each atom contributes one electron to the shared pair that holds them together.

In contrast, ionic bonds are formed when one or more electrons are transferred between atoms, creating a positive ion (the atom that loses the electron) and a negative ion (the atom that gains the electron).