A Violation of the Profession's Ethical Standards Would Most Likely

question 22

Multiple Choice

A violation of the profession's ethical standards would most likely have occurred when a CPA:

• A)purchased a bookkeeping firm's practice of monthly write-ups for a percentage of fees received over a three-year period.
• B)made arrangements with a bank to collect notes issued by a client in payment of fees due.
• C)named Smith formed a partnership with two other CPAs and used "Smith & Co." as the firm name.
• D)issued an unqualified opinion on the 2011 financial statements when fees for the 2010 audit were unpaid.

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Definitions:

Average Rate of Return

A financial ratio that shows the average annual return on an investment, expressed as a percentage of the initial investment cost.

Estimated Annual Net Income

The projection of net earnings over a given fiscal year, taking into account all expected revenue and expenses.

Cash Payback Period

The length of time it takes for an investment to generate enough cash flow to recoup the original investment.

Annual Net Cash Flows

The net amount of cash that is received or expended by a business during a year, after all cash inflows and outflows are accounted for.