An Auditor Searching for Related-Party Transactions Should Obtain an Understanding

question 30

Multiple Choice

An auditor searching for related-party transactions should obtain an understanding of each subsidiary's relationship to the total entity because:

• A)intercompany transactions may have been consummated on terms equivalent to arm's length transactions.
• B)this might reveal whether particular transactions would have taken place if the parties had not been related.
• C)the business structure may be deliberately designed to obscure related-party transactions.
• D)this might permit the audit of intercompany account balances to be performed as of concurrent dates.

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Definitions:

Life Stress Theory

A theory suggesting that significant life stressors can trigger mental health issues such as depression and anxiety.

Interpersonal Conflict Theory

A framework that focuses on the dynamics of conflict, power, and resolution in interpersonal relationships.

Rumination Theory

The concept that persistent contemplation on one's distress or problems, without active problem-solving, can contribute to the development or worsening of depressive symptoms.

Internal Attribution

The process of attributing the cause of behavior to internal or personal factors.