Which one of the following would NOT fit the description of a related- party transaction?
A) Sales of merchandise between a parent company and its subsidiary
B) Exchange of equipment between two companies owned by the same person
C) An unusually large sale of merchandise to the company's best and largest customer
D) Loans to corporate officers at market rates of interest with a regular repayment schedule

Question

Quizplus · Accepted Answer

A related-party transaction involves any transaction between two entities that have a pre-existing relationship, such as a parent company and its subsidiary or two companies owned by the same person. Option C does not involve a pre-existing relationship, making it the only answer that does not fit the description of a related-party transaction. Options A, B, and D all involve transactions between entities with a pre-existing relationship.

Which One of the Following Would NOT Fit the Description