Two Entities Are Not Regarded as Related Parties Simply Because

question 36

Multiple Choice

Two entities are not regarded as related parties simply because:

• A) one entity is a post- employment benefit plan for the other entity;
• B) one entity is a subsidiary of the other entity;
• C) a member of the key management personnel of one entity controls the other entity;
• D) a member of the key management personnel of one entity has significant influence over the other entity.

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Definitions:

Contra-Revenue

Accounts on the income statement that are deducted from gross revenue to arrive at net revenue, such as sales returns, allowances, and discounts.

Operating Expense

Costs related to the daily operations of a business, excluding the cost of production.

Credit Terms

The payment terms and conditions agreed upon by the buyer and seller, detailing the time period in which the buyer must pay the seller for the goods or services received.

Merchandise

Goods that are purchased, held, and resold by a business in the normal course of its operations.