Under Which of the Following Circumstances Would the Independence of a CPA

question 24

Multiple Choice

Under which of the following circumstances would the independence of a CPA be considered impaired if the CPA, who also is an attorney, serves as auditor and provides legal services to the same private client?

• A)When the CPA, as legal agent, consummates a business acquisition for the client.
• B)When the CPA's audit fees and legal fees are not billed separately.
• C)When the CPA uses legal expertise to research a question of income tax law.
• D)When the legal services consist of an analysis of the terms of an existing lease agreement.

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Definitions:

Total Revenue

The total amount of money a firm receives from its sales of goods or services, calculated by multiplying the price per unit by the number of units sold.

Average Revenue

The amount of money a company makes for each unit of product sold, which is found by dividing the overall revenue by the number of units sold.

Competitive Market

A market structure characterized by a large number of buyers and sellers, where each has a negligible impact on market price.

Marginal Revenue

The additional income that will be generated by increasing product sales by one unit.