Accounting Multiple Choice Question – 13 October 2025

Which ONE of the following are true in respect of related party transactions?

Select ONE answer:

1. Related party transactions do not always need to be disclosed in the financial statements
2. Related party transactions tend to be low-risk to the auditor
3. Related party transactions disclosure is unlikely to be material to the financial statements
4. Related party transactions will probably pose a significant control risk in relation to the entity

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct =>    is correct, because it is commonly the case that management has not put in place reliable internal controls to identify related party transactions.

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