Why Do Auditors Ask About Related Party Transactions and Where

question 20

Essay

Why do auditors ask about related party transactions and where do they typically do this?

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Definitions:

Income

The money received, especially on a regular basis, for work or through investments.

Rational Consumer

An economic concept assuming that consumers make decisions to maximize their utility based on available information and their preferences.

Consumer Equilibrium

In marginal utility theory, the combination of goods purchased that maximizes total utility by applying the utility-maximizing rule. In indifference curve analysis, the combination of goods purchased that maximizes total utility by enabling the consumer to reach the highest indifference curve, given the consumer’s budget line (or budget constraint).

Prices

The amount of money required to purchase goods or services, often determined by supply and demand dynamics.