In Auditing Related Party Transactions, an Auditor Ordinarily Places Primary

question 25

Multiple Choice

In auditing related party transactions, an auditor ordinarily places primary emphasis on:

• A)the probability that related party transactions will recur.
• B)confirming the existence of the related parties.
• C)verifying the valuation of the related party transactions.
• D)the adequacy of the disclosure of the related party transactions.

---

Definitions:

Variable Cost

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production volume.

Fixed Costs

Expenses that remain constant regardless of the amount of goods produced or sold, including lease payments, wages, and insurance premiums.

Break-even Point

The level of production or sales at which total revenues equal total expenses, resulting in no net gain or loss.

Sales Mix

The combination of products or services that a company sells, which significantly impacts its profitability.