The Principal Concern with Accounting for Related-Party Transactions Is

question 50

Multiple Choice

The principal concern with accounting for related-party transactions is:

• A) The size of the transactions.
• B) Differences between economic substance and legal form.
• C) The absence of legally binding contracts.
• D) The lack of accurate data to record transactions.

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Definitions:

Substantial-purpose Rule

A legal doctrine that focuses on the main objective of an action to determine its legality or the applicability of certain laws.

Main-purpose Rule

A legal principle stating that if the main purpose of a promise to pay another's debt is to benefit the promisor, the promise may be enforceable without being in writing.

Executor

An individual appointed in a will to manage the estate of the deceased, ensuring that all affairs are settled and wishes are honored.

Estate

The total property, assets, and liabilities of a person, especially considered in the context of inheritance or estate planning.