Most Auditors Assess Inherent Risk as High for Related Parties

question 50

Multiple Choice

Most auditors assess inherent risk as high for related parties and related-party transactions because:

• A)of the unique classification of related-party transactions required on the balance sheet.
• B)of the lack of independence between the parties.
• C)of the unique classification of related-party transactions required on the income statement.
• D)it is required by generally accepted accounting principles.

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Definitions:

Somatic Nervous System

A component of the peripheral nervous system that controls voluntary movements of the body's muscles.

Central Nervous System

The part of the nervous system consisting of the brain and spinal cord, which integrates information received from the body and coordinates activity.

Norepinephrine

A neurotransmitter and hormone involved in the body's fight or flight response, influencing attention, heart rate, and blood pressure.

Adrenal Glands

Glands located above the kidneys that produce hormones such as adrenaline and cortisol, involved in stress response.