Which of the Following Loans Would Be Prohibited Between a CPA

question 60

Multiple Choice

Which of the following loans would be prohibited between a CPA firm or its members and an audit client?

• A)Automobile loans
• B)Loans fully collateralized by cash deposits at the same financial institution
• C)New home mortgage loans
• D)Unpaid credit card balances not exceeding $10,000 in total

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Definitions:

Negotiable

Capable of being transferred or modified through discussion or bargaining; also refers to financial instruments that can be transferred freely.

Quasi-Contract

The doctrine by which courts imply, as a matter of law, a promise to pay the reasonable value of goods or services when the party receiving such goods or services has knowingly done so under circumstances that make it unfair to retain them without paying for them.

Express Promise

is a clear and explicit commitment or assurance given by one party to another, typically in a contractual context.

Unilateral Contract

A contract formed by an offer or a promise on one side for an act to be done on the other, and a doing of the act by the other by way of acceptance of the offer or promise; that is, a contract wherein the only acceptance of the offer that is necessary is the performance of the act.