CPA Experts,Inc

question 78

Multiple Choice

CPA Experts,Inc. ,a well-known public accounting firm has enjoyed a long-standing relationship with one of its clients,Generation Technologies,Inc.Recently,at a company-wide gala,the CEO of Generation Technologies announced that CPA Experts has performed the firm's independent audits for the past ten years,and he is looking forward to exploring other services that CPA Experts has to offer,including financial consulting."After all," he exclaims,"A recent magazine article called CPA Experts the 'profitability geniuses '!" As a senior accountant for Generation Technologies,how do you advise your CEO?

• A)You inform the CEO that in order to remain competitive,Generation Technologies needs to utilize the expertise of professional accounting firms who can deliver new and innovative techniques for cutting costs and improving profitability.
• B)You explain that it would create a conflict of interest to have both internal and external accountants.
• C)You inform the CEO about Sarbanes-Oxley rulings concerning the utilization of the same firm for auditing and consulting.
• D)You explain that hiring CPA Experts,Inc.to perform consulting would constitute a more in-depth partnership.Generally Accepted Accounting Principles would require Generation Technologies to purchase stock in CPA Experts.

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Definitions:

Federal Reserve

The central banking system of the United States, responsible for monetary policy, including regulating banks, managing the country's money supply, and stabilizing the financial system.

Reserve Requirement

The portion of depositors' balances that banks must have on hand as cash, ensuring banks can meet withdrawal demands.

Money Supply

The total amount of monetary assets available in an economy at a specific time, influencing inflation and economic stability.

Bank Reserves

The portion of deposits that banks are required to hold either in cash in their vaults or on deposit with a central bank, as a precaution to ensure bank liquidity.