Chapter 3 CPA exam questions & Answers. 100% Accurate. Graded A+
Which of the following statements best describes the ethical standard of profession pertaining to advertising and solicitation
A) There are no prohibitions regarding the manner in which CPAs may solicit new business
B) All form...
Which of the following statements best describes the ethical standard of profession pertaining to
advertising and solicitation
A) There are no prohibitions regarding the manner in which CPAs may solicit new business
B) All forms of advertising and solicitation are prohibited
C) A CPA may advertise in a manner that isnt false, misleading, or deceptive
D) A CPA may only solicit new clients through mass mailings - ✔✔-C
According to the standards of the profession, which of the following circumstances will prevent a CPA
who is performing audit engagements from being independent
A) Employment of the CPA's spouse as a clients internal auditor
B) Obtaining a collaterized automobile loan from a financial institution client
C) Acting as a honorary trustee for a not-for-profit organization client
D) Litigation with a client relating to billing for consulting services for which the amount is immaterial -
✔✔-A
Burrow & Co., CPAs, have provided annual audit and tax compliance services to Mare Corp. for several
years. Mare has been unable to pay Burrow in full for services Burrow rendered nineteen months ago.
Burrow is ready to begin fieldwork for the current year's audit. Under the ethical standards of the
profession, which of the following arrangements will permit Burrow to begin the fieldwork on Mare's
audit?
A)Mare sets up a two-year payment plan with Burrow to settle the unpaid fee balance.
B)Mare commits to pay the past due fee in full before the audit report is issued.
C)Mare gives Burrow an eighteen-month note payable for the full amount of the past due fees before
Burrow begins the audit.
D)Mare engages another firm to perform the fieldwork, and Burrow is limited to reviewing the
workpapers and issuing the audit report. - ✔✔-B
, According to the ethical standards of the profession, which of the following acts is generally prohibited?
A) Retaining client records after an engagement is terminated prior to completion and the client has
demanded their return
B) Issuing a modified report explaining a failure to follow a governmental regulatory agency's standards
when conducting an attest service for a client
C) Revealing confidential client infomation during a quality review of a professional practice by a team
from the state CPA society
D) Accepting a contingent fee for representing a client in an examination of the clients federal tax return
by an IRS agent - ✔✔-A
Under the ethical standards of the profession, which of the following positions would be considered a
position of significant influence in an audit client
A) A marketing position related to the clients primary products
B) A policy-making position in the clients finance division
C) A staff position in the client's reasearch and development division
D) A senior position in the clients human resources division - ✔✔-B
A CPA who is not in public practice is obligated to follow which of the following rules of conduct
A) Independence
B) Contingent fees
C) Commissions
D) Integrity and objectivity - ✔✔-D
Under the Code of Professional Conduct of the AICPA, which of the following is required to be
independent in fact and appearance when discharging professional responsibilities?
A. A CPA in public practice providing tax and management advisory services.
B. A CPA in public practice providing auditing and other attestation services.
C. A CPA not in public practice.
D. All CPAs. - ✔✔-B
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