Which One of the Following Is Not True Regarding the American

question 101

Multiple Choice

Which one of the following is not true regarding the American Institute of Certified Public Accountants peer review requirement?

• A) A CPA firm must develop and adhere to quality control standards.
• B) Peer reviews are mandatory.
• C) A CPA firm will lose AICPA eligibility if a peer review is not performed.
• D) Firms required to be registered with and inspected by the PCAOB are exempt.

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Definitions:

Letter of Credit

A financial document issued by a bank guaranteeing a buyer's payment to a seller in a transaction, effective in international trade.

Covenants

A promise by the firm, included in the debt contract, to perform certain acts. A restrictive covenant imposes constraints on the firm to protect the interests of the debtholder.

Payables

Short-term liabilities or money owed by a company to suppliers or creditors for goods and services received.

Rebate

A partial refund to someone who has paid too much money for tax, rent, or a utility, or an incentive payment to induce a particular purchase or behavior.