In the Performance of an Audit, a CPA

question 141

Multiple Choice

In the performance of an audit, a CPA

• A) is legally liable for detecting an immaterial client fraud.
• B) must strictly follow GAAP for privately held clients.
• C) must exercise constructive professional care in the performance of their audit responsibilities.
• D) must exercise due professional care in the performance of their audit responsibilities.

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Definitions:

Velocity of Circulation

The rate at which money is exchanged in an economy, representing the number of times a unit of currency is used to purchase goods and services within a given time period.

Classical Economist

An economist who believes in economic theories that emphasize free markets, minimal government intervention, and the importance of self-regulating business cycles.

Inadequate Aggregate Demand

A situation where the total demand for goods and services in an economy is not sufficient to produce full employment.

Recession

A decline in real GDP for two consecutive quarters.