A Professional Accounting Firm Has Several Audit and Tax Clients;

question 4

Multiple Choice

A professional accounting firm has several audit and tax clients; however, a single client represents 40% of the firm's revenue.This situation could result in the following threat to professional independence:

• A)Self-review
• B)Intimidation
• C)Advocacy
• D)Familiarity
• E)Over-dependence

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, with holders typically having voting rights and entitlement to dividends.

No-par Value

Refers to stocks issued without a nominal or face value, where the market value is determined by investor demand.

Legal Capital

The minimum amount of capital that a company must maintain as required by law, often to protect creditors.

Dividend Rate

The total dividends declared by a company over a period, usually a year, divided by the number of outstanding shares.