Jibbery Company Has Numerous Transactions with Related Parties

question 3

Multiple Choice

Jibbery Company has numerous transactions with related parties.For example,it has borrowed money from shareholders,purchases raw materials from a subsidiary company,and sells finished goods to its parent company.Which of the following describes one of the impacts of these transactions on risk assessment ?

• A)inherent risk would be set as low
• B)inherent risk would be set as high
• C)control risk would be set as low
• D)audit risk would be decreased

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Definitions:

Preferential Tax Breaks

These are specific tax provisions that benefit certain activities, industries, or groups, reducing their tax burden compared to others.

Political Influence

The impact that individuals, groups, or organizations have on political decisions, policies, and the legislative process.

Profit-Maximizing

A strategy or process by which a firm decides on the price and output level that leads to the highest profit.

Total Revenue

The total amount of money received by a company for goods sold or services provided during a certain time period.