For a Reporting Entity That Has Participated in Related-Party Transactions

question 15

Multiple Choice

For a reporting entity that has participated in related-party transactions that are material, disclosure in the financial report should include:

• A) the nature of the relationship and the terms and manner of settlement.
• B) details of the transactions within major classifications.
• C) a statement to the effect that a transaction was consummated on terms no less favourable than those that would have been obtained if the transaction had been with an unrelated party.
• D) a reference to deficiencies in the entity's internal control.

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Definitions:

Merchandise Inventory

Goods and products that a retailer, wholesaler, or distributor has on hand to sell to customers.

Purchases

In accounting, refers to the acquiring of goods or services that are necessary for the operation of a business or for resale.

Cost Of Merchandise Sold

The total cost of acquiring or manufacturing the goods that were sold to customers during a period.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent ones, preparing the books for the next period.