Which of the Following Best Describes the Reason That Auditors

question 51

Multiple Choice

Which of the following best describes the reason that auditors are concerned with the detection of related party transactions?

• A)The financial statements must often be adjusted for the effects of material related party transactions.
• B)Material related party transactions must be disclosed in the notes to the financial statements.
• C)The substance of related party transactions will differ from their form.
• D)In a related party transaction one party has the ability to exercise significant influence over the other party.

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Definitions:

Mutualistic Relationship

An ecological interaction between two or more species where each benefits and derives a positive effect from the relationship.

Photosynthetic Organisms

Life forms that convert light energy into chemical energy via photosynthesis, producing oxygen and organic compounds from carbon dioxide and water.

Nonphotosynthetic Partners

Organisms that do not perform photosynthesis but are involved in symbiotic relationships with photosynthetic organisms, often exchanging nutrients.

Oxygen

A chemical element with symbol O and atomic number 8, essential for most life forms on Earth as part of the process of respiration.