Which of the Following Statements Is True

question 65

Multiple Choice

Which of the following statements is true?

• A)A covered member can own one share of an attest client because it is immaterial.
• B)A covered member cannot own a mutual fund which contains attest client shares, as long as the investment in the mutual fund is not material to the covered member.
• C)A covered member can be an executor of an estate, which invests in an attest client, as long as the investment is not material.
• D)A CPA firm as an entity is prohibited from the same activities as a covered member of the firm.

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Definitions:

Adjusting Entries

Journal entries made in accounting records at the end of an accounting period to update the balances of certain accounts.

Financial Statements

Formal records of the financial activities and position of a business, including the balance sheet, income statement, and cash flow statement.

Accounting System

A structured process of collecting, recording, summarizing, and reporting financial transactions of a business or individual.

Accrual Basis of Accounting

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash transactions occur.