A General Principle of Disclosure Is That Material Related-Party Transactions

question 72

Multiple Choice

A general principle of disclosure is that material related-party transactions should be disclosed. As the auditor of the Clarence Company, you have noted the following transactions entered into by Clarence during the past fiscal year:

Assuming all of the above transactions are material, which transaction or transactions above most likely would be a related party transaction requiring disclosure in Clarence's financial statements?

• A) Only I above.
• B) Only III above.
• C) Both I and III above.
• D) Both II and III above.

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