A Related-Party Transaction Is Material If

question 18

Multiple Choice

A related-party transaction is material if:

• A) Its omission from the report or misstatement would result in significant financial disadvantage to a third party, whether it be an owner, debt-holder or other stakeholder, or if it involves the auditor.
• B) Its omission, non-disclosure, or misstatement has the potential to affect decisions about the allocation of scarce resources by users of the accounts and consolidated accounts, or the discharge of accountability by directors or if it is a transaction by a director with the reporting entity.
• C) Its omission from the report or misstatement would result in the accounts not providing an accurate representation of the financial position or performance of the reporting entity, or if it is a transaction by any member of the senior management of the reporting entity.
• D) Its omission, non-disclosure, or misstatement has the potential to affect decisions about the allocation of scarce resources by users of the accounts and consolidated accounts, or the discharge of accountability by directors.
• E) None of the given answers.

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Definitions:

Nonrecurring Events

Events or activities that happen once and do not repeat over time.

Purpose Statement

A declaration that outlines the intent or goal of a document, project, or study.

Action Verbs

Words that express an action, whether physical or mental, often used to make writing more dynamic and powerful.

Primary Data

Primary data is original data collected directly by the researcher for a specific research purpose, as opposed to being gathered from existing sources.