Which of the Following Is Not a Conflict of Interest

question 17

Multiple Choice

Which of the following is not a conflict of interest in accounting firms?

• A)The firm provides consulting as well as rating creditworthiness.
• B)Auditors may be pressured to skew their opinions so the client will stay with the firm.
• C)Auditors may be reluctant to criticize advice put into place by nonaudit personnel of the firm.
• D)Auditors release an overly favorable audit in order to solicit business.

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Definitions:

Residual Value

The estimated amount that an asset will be worth at the end of its useful life, often used in calculating depreciation and lease payments.

Straight-Line Method

The Straight-Line Method is a way of allocating the cost of an asset evenly over its useful life, commonly used in depreciation and amortization calculations.

Depreciation

The methodical distribution of a physical asset's cost over its expected lifespan, representing deterioration or becoming outdated.

Depletion Expense

The allocation of the cost of natural resources over the period they are consumed.