A general principle of disclosure is that material related-party transactions should be disclosed. As the auditor of the Clarence Company, you have noted the following transactions entered into by Clarence during the past fiscal year:

Assuming all of the above transactions are material, which transaction or transactions above most likely would be a related party transaction requiring disclosure in Clarence's financial statements?
A) Only I above.
B) Only III above.
C) Both I and III above.
D) Both II and III above.

Question

A general principle of disclosure is that material related-party transactions should be disclosed. As the auditor of the Clarence Company, you have noted the following transactions entered into by Clarence during the past fiscal year:

Assuming all of the above transactions are material, which transaction or transactions above most likely would be a related party transaction requiring disclosure in Clarence's financial statements?
A) Only I above. 
B) Only III above. 
C) Both I and III above. 
D) Both II and III above.

Quizplus · Accepted Answer

The Answer of A general principle of disclosure is that material related-party transactions should be disclosed. As the auditor of the Clarence Company, you have noted the following transactions entered into by Clarence during the past fiscal year:

Assuming all of the above transactions are material, which transaction or transactions above most likely would be a related party transaction requiring disclosure in Clarence's financial statements?
A) Only I above. 
B) Only III above. 
C) Both I and III above. 
D) Both II and III above.

A General Principle of Disclosure Is That Material Related-Party Transactions