Which of the following is NOT indicative of a related-party transaction?
A) an unusually large sale of merchandise to the company's best and largest customer
B) loans to corporate officers at market rates of interest with a regular repayment schedule
C) exchange of equipment between two companies owned by the same person
D) sales of merchandise between a parent company and its subsidiary

Question

Quizplus · Accepted Answer

Related-party transactions involve exchanges between parties that have a pre-existing relationship, such as companies with common ownership or individuals in positions of influence within a company. An unusually large sale to a company's best and largest customer does not inherently indicate a related-party transaction unless that customer has a specific relationship with the company's management or owners. Options B, C, and D involve transactions between parties with clear relationships (corporate officers, companies owned by the same person, and a parent company with its subsidiary), which are indicative of related-party transactions.

Which of the Following Is NOT Indicative of a Related-Party