Which of the Following Statements Is Not in Accordance with AASB

question 19

Multiple Choice

Which of the following statements is not in accordance with AASB 124 "Related Party Disclosures"?

• A) A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged.
• B) If there have been transactions between related parties, an entity shall disclose the nature of the related party relationship as well as information about the transactions and outstanding balances necessary for an understanding of the potential effect of the relationship on the financial statements.
• C) Transactions between the reporting entity and its key management personnel are deemed material.
• D) Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.
• E) In AASB 124 "Related Party Disclosures", two entities having a director in common are assumed related parties.

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Definitions:

Raw Materials Used

The basic materials and components required in the production process of goods.

Work in Process

Work in Process represents partially completed goods that are still in the production process at the end of a reporting period.

Labor Rate Variance

The difference between the actual cost of labor and the standard or budgeted cost, used to control and manage labor costs effectively.

Labor Efficiency Variance

The difference between the actual labor hours used and the standard hours expected for a level of output.