Which of the Following Is NOT Considered a Related Party

question 85

Multiple Choice

Which of the following is NOT considered a related party for the purpose of limitation on accruals to related parties?

• A) Brother when the taxpayer is an individual.
• B) A partner when the taxpayer is a partnership.
• C) A minority shareholder when the taxpayer is a corporation.
• D) Spouse when the taxpayer is an individual.
• E) All of the parties in all the choices are related parties.

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Definitions:

Matching Principle

An accounting principle that requires expenses to be recorded and recognized in the same period as the revenues they helped to generate.

Expenses

Costs incurred in the normal course of business to generate revenues, including costs such as rent, salaries, and utility expenses.

Related Revenue

Income generated from sales or transactions that are directly related to the core operations or primary activities of a business.

Deferred Revenue

Income received by a company for goods or services yet to be delivered or performed; it is recorded as a liability on the balance sheet until the transaction is completed.