Your uncle, who has a second home in Bethany Beach, Delaware, is planning to sell it in the next few weeks. You are interested in buying this beachside property, so your agent negotiates a price for the house with your uncle's agent. This transaction is an example of:
A) the cost principle.
B) the assumption of arm's-length transactions.
C) the realization principle.
D) the going concern assumption.

Question

Quizplus · Accepted Answer

The transaction between the buyer (you) and the seller (your uncle) is an example of an arm's-length transaction, where both parties act in their own self-interest to negotiate a fair price for the property. The cost principle, realization principle, and going concern assumption do not directly apply to this transaction.

Your Uncle, Who Has a Second Home in Bethany Beach