Identify the Correct Statement About an Arm's-Length Transaction

question 1

Multiple Choice

Identify the correct statement about an arm's-length transaction.

• A)It is a transaction involving a party that is controlled by another entity and does not act on its own behalf.
• B)It is a transaction made by parties as if they were unrelated,in a free market system,each acting in its own best interest.
• C)It is a transactions in which one party sets aside independent interest so as to focus on the wishes of the controlling party.
• D)An arm's-length transaction should involve at least one interested party that is concerned about the probable consequences of the transaction.
• E)A transaction involving subsidiaries would not be considered an arm's-length transaction because the parties are acting independently.

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Definitions:

Medical Care

Professional services provided by individuals or institutions to individuals for the purpose of maintaining, improving, or managing health.

Gasoline and Oil

Refers to petroleum-based liquid mixtures primarily used as primary fuels in vehicles and industrial machines.

Durable Goods

Goods that are intended to last for a relatively long period of time without quickly wearing out, such as appliances, cars, and furniture.

Consumption

The act of using goods and services by households, leading to the decrease in value of goods and the depletion of services.