Which of the Following Statements Is True When the CPA

question 56

Multiple Choice

Which of the following statements is true when the CPA has been engaged to perform an audit of financial statements?

• A) The CPA firm is engaged and paid by the client; therefore, the firm has primary responsibility to be an advocate for the client.
• B) The CPA firm is engaged and paid by the client, but the primary beneficiaries of the audit are those who rely on the financial statements.
• C) Should a situation arise where there is no convincing authoritative standard available, and there is a choice of actions which could impact a client's financial statements, the CPA is free to endorse the choice which is in the investors' interests.
• D) The CPA firm has primary responsibility to the FASB.

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Definitions:

Interest

The cost of borrowing money or the payment received for lending money, typically expressed as a percentage of the principal.

Construction

The act of constructing or putting together buildings, infrastructure, or other significant physical constructions.

Building

A structure with a roof and walls, such as a house, factory, or school, often considered a non-current or fixed asset in accounting.

Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue.