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:

Straight-Line Method

This is a depreciation technique that allocates an equal portion of an asset's initial cost minus its salvage value to each year of the asset's useful life.

Semiannual

Semiannual refers to something that happens twice a year or every six months.

Discount on Bonds Payable

The variance between a bond's nominal value and the lesser amount it is sold for in the market.

Long-Term Liabilities

Debts or obligations of a business that are due for repayment in a period longer than one year.