WICAT Systems manufactures, markets, and services a complete line of computer systems, software, and courseware for training, education, and general-purpose markets. Headquarters for the company are located in Orem, Utah. In the company's 1986 annual report, revenues for the year were reported as \(\$ 39,405,000\). Net income was \(\$ 389,000\). The notes to the 1986 financial statements included the following comments.

\section*{RELATED-PARTY TRANSACTIONS}

The Company is affiliated with The WICAT Education Institute, a shareholder, and is the general partner in WISTRAN Partners and BASICS Partnership. The Company has billed The WICAT Education Institute for system sales and services amounting to \(\$ 291,000, \$ 580,000\), and \(\$ 136,000\) for the years ended 1984,1985 , and 1986, respectively. The WICAT Education Institute has billed the Company for services and rent amounting to \(\$ 75,000, \$ 199,000\), and \(\$ 4,000\) for the years ended 1984, 1985, and 1986, respectively.

Why do you think WICAT Systems included the above comments in its annual report? What accounting principle might be compromised by related-party transactions?