Which of the Following Is Not a Related Party Transaction

question 18

Multiple Choice

Which of the following is not a related party transaction?

• A) Acme Corporation leases office space to Norton Company. Mr. and Mrs. Norton own Norton Company and 65% of Acme Corporation's stock.
• B) BBD Inc. licenses a patent from Nugo Inc., which owns 82% of BBD's outstanding stock.
• C) Beth Teal pays $15,000 a year to her gardener, Ben. Beth is Ben's grandmother.
• D) All the transactions are between related parties.

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Definitions:

Total Cost

The complete cost of production, including both fixed and variable costs, to manufacture a product or deliver a service.

Processing Department

A division within a manufacturing operation where a specific type of processing or assembly is completed.

Equivalent Units

A measure used in process costing that converts partially completed units into a smaller number of fully completed units.

First-in

Typically refers to the "First-In, First-Out" (FIFO) inventory method where the oldest inventory items are recorded as sold first.